Takeda Pharmaceutical Q4 2025 Earnings Report

Takeda Pharmaceutical EPS Results

• Actual EPS: $0.16
• Consensus EPS: $0.24
• Beat/Miss: Missed by -$0.08
• One Year Ago EPS: N/A

Takeda Pharmaceutical Revenue Results

• Actual Revenue: $7.34 billion
• Expected Revenue: $8.02 billion
• Beat/Miss: Missed by -$682.90 million
• YoY Revenue Growth: N/A

Takeda Pharmaceutical Announcement Details

• Quarter: Q4 2025
• Date: 5/8/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 6:00AM ET

Takeda Pharmaceutical (NYSE:TAK) engages in the research, development, manufacture, marketing, and out-licensing of pharmaceutical products in Japan and internationally. It offers pharmaceutical products in the areas of gastroenterology, rare diseases, plasma derived therapies, immunology, oncology, and neuroscience. The company provides its products under the Entyvio, Gattex/Revestive, Takecab/Vocinti, Alofisel, Dexilant, Pantoloc/Controloc, Adynovate/Adynovi, Feiba, Recombinate, Hemofil/Immunate/Immunine, Takhzyro, Livtencity, Elaprase, Replagal, Advate, Flexbumin, Vpriv, Gammagard Liquid/Kiovig, Hyqvia, Cuvitru, Exkivity, Ninlaro, Velcade, Azilva-F, Lotriga, Iclusig, Leuplin/Enantone, Adcetris, vyvanse/elvanse, Trintellix, and Alunbrig brands. It has in-license agreement with BioMarin, Luxna Biotech, GlaxoSmithKline, Halozyme, and Kamada; collaboration with Neurocrine Biosciences, Inc., Seagen Inc., Anima Biotech, Denali Therapeutics, KSQ Therapeutics, Noile-Immune Biotech, Center for iPS Cell Research Application, Kyoto University (CiRA), and Charles River Laboratories; licensing agreement with Mirum Pharmaceuticals and Twist Bioscience, UCSD/Fortis Advisors, PeptiDream, MD Anderson Cancer Center, Teva Pharmaceutical Industries, and Xenetic Biosciences; collaboration and licensing agreement with Arrowhead Pharmaceuticals Inc., Engitix, Genevant Sciences Corporation, Sosei Heptares, Zedira/Dr. Falk Pharma, Exelixis, Inc., GlaxoSmithKline, Heidelberg Pharma, HUTCHMED, Presage Biosciences, Codexis, Inc., Ensoma, Envozyne, KM Biologics, and Selecta BioScience, and Ovid Therapeutics Inc.; and collaboration with ZEDIRA GmbH and Dr. Falk Pharma GmbH. It has research collaboration and licensing agreement with Crescendo Biologics, Code Bio, Immusoft, Poseida Therapeutics, and Selecta Biosciences. The company was founded in 1781 and is headquartered in Tokyo, Japan.

Takeda Pharmaceutical Q4 2025 Earnings Call Transcript

Key Takeaways

• Takeda delivered FY24 core revenue growth of 2.8% (CER) and core operating profit growth of 4.9% (CER), with core EPS slightly below guidance due to higher-than-expected tax expenses.
• The growth and launch portfolio now represents 48% of total revenue and grew 14.7% (CER), driven by products like TAKHZYRO and immunoglobulin, while ENTYVIO’s pen underperformed due to US reimbursement delays.
• Takeda’s late-stage pipeline features six Phase III programs, highlighted by positive topline results for rusfertide in polycythemia vera; zazositanib (psoriasis) and oviporextinib (narcolepsy type 1) Phase III readouts are expected this year.
• An enterprise-wide efficiency program generated approximately ¥200 billion in annualized savings, lifting the core operating margin to 25.4% and funding reinvestment in R&D and new launches.
• For FY25, Takeda forecasts broadly flat revenue, core operating profit and EPS at CER—marking the last significant year of Vyvanse generic erosion—and will raise the dividend to ¥200 per share, with limited tariff exposure given its US manufacturing and IP footprint.

Presentation

[Moderator]

Thank taking time at a very busy schedule to join our earnings announcement for FY twenty four

[Moderator]

for Takeda. I'm the master assembly,

[Moderator]

head of IR. My name is O'Reilly. We the If you want to listen to the original, please turn

[Moderator]

it off.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

For those of you who wish to listen to this call in English, please select English in the Zoom language select button.

[Moderator]

Before finishing, I'd like to remind everyone that we'll be discussing forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause our actual results to differ materially are discussed in our most recent Form 20 F and our other SEC filings. Please also refer to the important notice on Page two of the presentation regarding forward looking statements and our non IFRS financial measures, which will be also be discussed during this call. Definitions of our non IFRS measures and reconciliation with the comparative IFRS financial measures are included in the appendix in the presentation.

[Moderator]

Please also refer to Page two for important reference. Moving on to today's presentation. Today, we have President and CEO, Christoph Weber Chief Financial Officer, Milan Fruta President, R and D and Ipsample presenting to you today. And this will be called by question and answer. Let us get started.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Thank

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

you, Chris, and thank you everyone for joining us today. If we go to the first slide, yes. Our fiscal year twenty twenty four performance was driven by a combination of factors: significant generic impact from Vyvanse loss of exclusivity strong momentum in our growth and launch product portfolio, which more than offset the generic impact and robust OpEx control, which helped grow our core operating profit margin. We also demonstrated the potential of our pipeline with accelerated progress in late stage programs. Looking at our financial results, fiscal year twenty twenty four core revenue grew 2.8% at constant exchange rate, driven by our growth and launch product, which grew 14.7%.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

This portfolio of product now accounts for 48% of Takeda total core revenue. Our core operating profit for the full year was 1,200,000,000.0 yen representing growth of 4.9% at constant exchange rate. Core EPS fell slightly short of our upgraded guidance due mainly to higher than anticipated tax expense. Core operating profit margin was 25.4%. This was more than two percentage points above our original expectation and represent growth of 65 basis points compared with the previous fiscal year or two seventy basis points if we exclude balance impact.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Significant OpEx savings resulting from our multiyear efficiency programs were an important driver of core operating profit and margin growth. Milando will provide an update on the efficiency program in his presentation. In addition, we continue to progress our late stage pipeline in fiscal year twenty twenty four, supporting our future growth. We now have six Phase III programs underway across our core therapeutic areas. In March, we read out positive and highly promising top line results from a Phase III study of rispertyl in polycythemia vera, a rare form of blood cancer.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

During fiscal year twenty twenty four, we also completed Phase III enrollment for zazucitanib in psoriasis and oviporexten in narcolepsy type one. These are on track for data readout in this year with target filing date in fiscal year twenty twenty five and 2026. We are excited by the opportunities in our pipeline. This differentiated product has the potential to transform the life of patients in each of our therapeutic focused areas. Turning to slide five.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

We achieved strong performance across our growth and launch product portfolio. This life transforming treatment now account for 48% of our revenue and achieved double digit revenue growth of 14.7% at constant exchange rate. TAKHZYRO and immunoglobulin continued their strong growth 1912% respectively and newly launched products for Zicla and Adzaima had impressive uptake exceeding revenue expectation. Pudenga also continues its excellent launch trajectory with strong demand in both endemic and travel market. Although ENTYVIO revenue performance has been below our expectation in fiscal year twenty twenty four, we are still growing above market and growth momentum is building with the expansion of ENTYVIO pen.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

The reason for this underperformance in The U. S. Is that we underestimated the challenge associated with the changing U. S. Access landscape.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

The pen is a new formulation without extra cost for payers, but is in a different insurance plan compared to the IV formulation, which has been covered for the past ten years. As a result, it has taken longer than expected to gain easy access for patients and we are therefore still working to improve reimbursement and authorization pathways for patients. On the other hand, prescriber and patient feedback on the pen has been extremely positive, which once access becomes seamless, will bode well for the future of the pen and Antivu. We expect ENTYVIO to maintain its market share leadership and grow faster than the market even as treatment option in the IBD market are increasing. We are of course leveraging that what we have learned from this experience as we prepare for new pipeline launches.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Albumin growth in fiscal year twenty twenty four was impacted by planned upgrade to manufacturing operation as well as lower demand in China, but we anticipate a return to a growth trajectory of high single digits in fiscal year twenty twenty five. We expect overall this growth and launch product portfolio to support revenue and profit resilience through the final year of substantial balance erosion in fiscal year twenty twenty five and continue to drive our growth agenda through the end of the decade. Turning to slide six, I will discuss our position within the recently evolving tariff landscape. Note that our fiscal year twenty twenty five guidance does not include potential tariff impact on pharmaceutical products. This is because while the situation remained dynamic, based on what we know today, we believe that our likely potential exposure to U.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

S. And China tariff is limited. Tariff exposure is determined by how much of total revenue come from imports, manufacturing site location and country of origin and transfer pricing policy. This map illustrates Takeda internal global manufacturing footprint. We have 20 manufacturing sites that supply The U.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

S, which are shown in bold on the map. Seven of these sites are located in The United States. The others are in Europe, Japan and Singapore. Our strategic contract manufacturers, which we use for about 20% of our production, are distributed across The U. S, Europe and Japan, and approximately 70% of our global CMOs cost is with U.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

S.-based CMOs. Our own manufacturing facility in China supports only our business in China. You can see from the map that we have historically invested significantly in The U. S. And our investments are not limited to manufacturing.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

We also have a vast network of BioLife Plasma Donation Center as well as a majority of our R and D spend and functions located in The U. S. Note that based on our current strategy alone, we currently plan to invest about US30 billion dollars in the next five years in The U. S. This reflects the fact that The U.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

S. Is the world's leading market for biopharmaceutical innovation focused company like Takeda and I hope that will continue. To roughly quantify the scope of our business of our U. S. Business subject to potential tariffs, Please note that while approximately 50% of total revenue is from The U.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

S, the custom value of import into The U. S. Is only about 8% to 10% of our total U. S. Revenue.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Of note, our largest product by revenue in The U. S. Antivio is 100% U. S. Country of origin.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

The custom value of U. S. Origin product that we ship to China is about 12% to 15% of our China revenue. But while China is a very important business in our overall business, it is growing rapidly. China revenue today is still a significantly smaller percentage of overall company revenue at approximately 4%.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

We continue to monitor the global tariff situation closely. Until more is known, it would be difficult to predict the total impact with certainty. But like all global company, we are looking across our global supply chain and taking mitigation measure for import that may be subject to potential tariff impact. Turning to the next slide. We are excited for the future and expect 2025 to be a pivotal year for Takeda as we advance our late stage pipeline and prepare for new launches.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Key milestones already include very positive top line results for a Phase III study of risperidide. Andy will introduce the top line results later, but the efficacy was at the high end of what we had been hoping for with a tolerable safety profile. This reinforced our optimism about peak revenue potential of 1,000,000,000 to $2,000,000,000 that we introduced at our R and D Day last year. In 2025, we'll review one year safety and durability of response data prior to submitting this very promising therapy for FDA review. During fiscal year twenty twenty four, we also completed Phase III enrollment for azacitinib and oviporextone, which are on track for data readout this year.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Ovoporexant is on track to be a first in class orexin agonist to address the underlying orexin deficiency that causes narcolepsy type one. It has the potential to deliver a new era of care with transformative outcome for people living with narcolepsy type one. Phase three recruitment completed ahead of projection and data readout is expected in the first half of fiscal year twenty twenty five. This could be a $2,000,000,000 to $3,000,000,000 peak revenue product in narcolepsy type one. Next, zanocetinib is a highly selective oral TYK2 inhibitor that could offer a great treatment option for patients with psoriatic arthritis and other immune related inflammatory disease.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Currently, we are conducting Phase III trial of psoriasis and psoriatic arthritis with the first dosing for psoriatic arthritis starting in March. We are looking forward to sharing the top line results of our Phase III trial for psoriasis later this year, followed by regulatory submission in fiscal year twenty twenty six. Shifting to our financial outlook for 2025 fiscal year '20 '20 '5, we expect broadly flat revenue, core operating profit and core EPS at constant exchange rate. Our revenue outlook reflects continued momentum in our growth and launch product, offsetting the carryover of Vyvanse decline into fiscal year twenty twenty five. This should be the final year of significant impact from Vyvanse generics.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Our profit guidance reflects anticipated gain from our efficiency program as well as increased investment in R and D, data and technology and new launch preparation for our late stage pipeline program. Finally, in line with our progressive dividend policy, I am pleased to announce a further dividend increase to 200 yen per share. With that, I will turn the call over to Milano to review our financial performance and guidance in more details.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

Thank you, Christophe. Hi, everyone. This is Milano Fruta speaking. So Slide 10 summarizes our financial results for FY 2024. Reported revenue was 580,000,000,000.00 yen with growth of 7.5% versus prior year.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

Core revenue, which includes a small adjustment related to divestiture of Takeda Teba JV in Japan, grew 7.4% at actual FX or 2.8% at CER or constant exchange rate. Core operating profit or core OP was JPY 1,160,000,000,000.00, a year on year increase of 10.2% at actual FX or 4.9% at CER. Our core operating profit margin was 25.4%, improving versus prior year despite gross margin pressure from Viadent's loss of exclusivity. This reflects OpEx discipline to an enterprise wide FCC program. Reported operating profit was JPY 3 and 42,600,000,000.0, which grew 60%.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

Core EPS and reported EPS were JPY $4.91 and JPY68, respectively, with both impacted by higher tax expenses compared to the prior year. Operating cash flow was over JPY1 trillion and adjusted free cash flow was $769,000,000,000 yen Our strong cash flow performance reflected quarterly growth, lower cash taxes and less business development spend compared to the prior year. Slide 11 shows our performance versus management guidance. We upgraded our guidance twice during the fiscal year to reflect the product momentum, including guidance and OpEx management through our efficiency program. Compared to our latest guidance from Q3, core revenue delivered as planned and the operating profit was at the high end of our guidance due to continued OpEx efficiency.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

Core EPS, while ahead of our original guidance, landed slightly below the latest guidance, mainly because of a higher than anticipated tax expenses. This was due to several factors, including an increase in The U. S. International tax provision and the lower than anticipated R and D tax credits. Slide 12.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

Last year, we initiated an enterprise wide program to drive efficiencies across organization. Its executions have been fully on track, and we have captured approximately 200,000,000,000 in annualized savings to date. About 65% of savings are from compensation and benefits, with 3,000 positions impacted to date approximately, as well as further efforts to optimize organizational agility. About 20% of savings came from procurement initiatives across our value chain. The remaining 15% is from other areas such as rationalization of activities across sales and marketing through R and D and savings in facilities and equipments with site optimizations, including the San Diego research site.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

Restructuring costs for the year were 128,100,000,000.0, slightly below our forecast of JPY 140,000,000,000. This efficiency program enabled us to reduce OpEx spend in FY 2024 and freeze up resources to advance our pipeline, prepare for new product launches and further build our digital technology capabilities. From Slide 13, I'll explain more about the year on year growth dynamics in FY 2024. First, revenue. Our gross and launch products, which grew 14.7%, more than offset the loss of exclusivity impact, mainly from Vyvanse and Adderall XR in The U.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

S. And Azilva in Japan. Net positive growth in other brands such as GATEX, Trintellix, ADCETRIS and ICLUSID also contributed to 2.8% revenue growth at CER. On actual FX basis, yen depreciation gave additional revenue lift by 195,000,000,000 Finally, this year, we recognized 1,700,000,000.0 yen of deferred revenue related to the divestiture of Takeda Teba JV in Japan. This is non core income that we adjust out of our core revenue results.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

Slide 14 shows the year on year bridge for cooperating profit. Gross profit slightly increased with momentum across our portfolio, offsetting the LOE impact of a high margin product such as guidance. Moving to OpEx, you can see that we have already realized savings from the efficiency program in FY 2024, gross savings of approximately

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

150,000,000,000.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

We are directing those savings toward investments in our late stage pipeline, new product launch preparations and offsetting inflationary increases. Overall, Co OP grew by 4.9% at CER or 10.2%, including the benefit from FX. Next, reported operating profit. In addition to core OP growth, the 60% increase was due to lower impairment cost, a net benefit in other operating income and expenses and an FX. Next is our cash flow analysis on Slide 16.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

Free cash flow was JPY $769,000,000,000, reflecting strong operating cash flow of over JPY 1,000,000,000,000, approximately JPY $250,000,000,000 of CapEx and JPY 57,600,000,000.0 of proceeds from the sale of the Takeda Teba JV. This exceeded our forecast of $550,000,000,000 to $650,000,000,000 yen due to lower CapEx and cash taxes on top of higher corporate profit. Our free cash flow comfortably covered our dividends and interest payments with excess cash put toward debt pay down and share buyback. This chart reflects a 51,900,000,000.0 yen of buybacks completed by the March. In April, we also finished the rest of the 1,000,000,000 buyback announced at Q3 earnings.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

Slide 17 shows our change in adjusted net debt. Our strong cash flow performance and EBITDA growth led to an improved leverage ratio of 2.8 times as of March 2025. Next, our latest debt maturity ladder. In quarter four, we prepaid 3 and 13,500,000,000.0 and USD 1,500,000,000.0 of syndicated loans using a combination of cash on hand, commercial paper and short term loans. We plan to refinance the short term funding with leverage neutral debt this fiscal year.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

Our debt profile remains very manageable with 100% of our debt at fixed rates with a weighted average of approximately 2% interest rate. Moving to our outlook for fiscal twenty twenty five. Our management guidance at CER is for broadly flat core revenue with FY 2025 expected to be the final year of significant finance generic headwind. We also expect core OP and core EPS to be broadly flat year on year, reflecting savings from our efficiency program and investment ahead of new launches from the late stage pipeline. Our free cash flow outlook is stable at JPY $750,000,000,000 to JPY $850,000,000,000.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

And in line with our progressive dividend policy, we plan to increase the annual dividends to JPY 200 per share. Please note that our forecast for FY 2025 does not reflect the potential impact of tariffs on pharmaceutical products by The U. S. Or other countries. We continue to monitor the situation and we'll update our forecast if and when appropriate.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

However, as Christophe explained earlier, based on the current assumptions, we believe our likely potential exposure to U. S. And China tariff is limited. Slide 20 shows more detail on our FY twenty twenty five revenue forecast. We expect a continued momentum from our growth and launch products, which should exceed 50% of total revenue this fiscal year.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

The growth of these products should more than offset the carryover impact from Vyvanse and other loss of exclusivities. Our revenue guidance also takes into consideration Medicare Part D redesign and 340B expansion in The U. S. Slide 21 further explains our outlook for FY twenty twenty five quarter B. Gross profit is expected to improve slightly, while OpEx should see a modest increase versus prior year.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

We will continue to invest in R and D and data and technology and in FY '20 '20 '5, we expect a meaningful uptick in launch investments for the late stage pipeline. Due to the acceleration of development pipelines, we now expect the risperotide of eprexedan and desositinib to all be filed in The U. S. In FY 2025 to 2026. We are able to accommodate this with savings generated by the efficiency program.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

Slide 22 explains our reported operating profit growth. Our reported operating profit forecast benefits from low amortization expenses, mainly due to the conclusion of the biomass amortization in January 2026, lower restructuring expenses and lower impairment cost assumption. Turning to my final slide, Page 23. The principle of our capital allocation policy remain unchanged. We remain committed to investment investing in growth drivers and delivering attractive returns to shareholders through our progressive dividend policy and share buybacks when appropriate.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

Meanwhile, I would like to clarify our target to reach 2x adjusted net debt to adjusted EBITDA. We finished fiscal twenty twenty four at 2.8 times, and we aim to further improve the leverage ratio going forward. Thank you. And I'll now hand over to Andy for updates on the pipeline.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

Thank you very much, Milano, and hello to everyone on today's call. If we go to the next slide, please. 2024 was a very successful year for our R and D organization. As Christophe has already highlighted, we entered 2025 with strong late stage pipeline momentum. As you can see on the left of this slide, we also had significant events in 2024 for our growth and launch products, delivering on several geographic expansions, including approvals for ENTYVIO subcu in The U.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

S. For Crohn's disease, FRAZACLA in The EU and Japan for metastatic colorectal cancer, and ADZINMA in The EU for congenital TTP. We also continue to execute in our global expansion strategy for Qudenga with approvals in Vietnam, Israel and Switzerland And Maralixibat, a regional development program for Japan, achieved approval for the treatment of pruritus associated with cholestasis in both Alagille syndrome and progressive familial intrahepatic cholestasis. Now moving to the right hand side of this slide, you can see that our late stage pipeline is advancing rapidly with important data readouts coming this year. Now here are a few examples of major milestones achieved in the past fiscal year twenty twenty four.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

Our highly selective oral allosteric TYK2 inhibitor, zazocitinib, completed enrollment in two Phase III psoriasis trials approximately seven months ahead of plan with a readout anticipated towards the end of twenty twenty five. Ovaprextin, our lead orexin-two receptor agonist, generated positive Phase IIb data in narcolepsy type one that was presented at the SLEEP twenty twenty four conference. Two Phase III trials of oviprextone in narcolepsy type one were initiated and completed enrollment in fiscal year twenty twenty four. We look forward to data readouts this summer. Our next generation oral orexin agonist TAK360 has also been accelerated, having initiated Phase II studies in narcolepsy type two and idiopathic hypersomnia.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

We presented compelling proof of concept data for our anti CD38 antibody, mezugitamab, in IgA nephropathy at the American Society of Nephrology Kidney Week meeting this past October, and we plan to initiate Phase III development this year. In oncology, we in licensed elritircept, an activin inhibitor from Karos Therapeutics for the treatment of anemia associated low and intermediate risk myelodysplastic syndrome, or MDS, and myelofibrosis. Phase IIb data in MDS was presented at the American Society of Hematology Annual Meeting in December 2024, and the Phase III development program is underway. As Christophe mentioned, in March, Takeda and our partner Protagonist Therapeutics announced very impressive Phase III data for ruspatide, a first in class synthetic hepcidin mimetic being developed for the treatment of polycythemia vera. This entire sequence of positive Phase III and Phase IIb readouts, combined with new strategic partnerships closely aligned with our therapeutic area strategies, continues our strong pipeline progression into fiscal year '20 '20 '5.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

Next slide, please. 2025 is indeed a pivotal year for our pipeline. For our six new molecular entity late stage programs, three will have pivotal readouts this year, rusfertide, oviprextinib and dazositinib. And we're off to a strong start, thanks to the positive Phase III results in March from the VERIFI study for ruspateride. We'll review the top line data from this thirty two week study in the following slide.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

Next, we have oviprextin. Our Phase III program for oviprextin includes two global pivotal studies in narcolepsy type one, which enrolled approximately ten months ahead of plan. Top line data is anticipated in the summer, and we plan to share the full Ovaprexim data at an upcoming medical conference and target regulatory filing this year. And finally, we have zazocitinib. In the first half of fiscal year twenty twenty five, we will initiate a head to head trial of zazocitinib versus ducravacitinib in psoriasis that will generate data helping to further demonstrate differentiation and support our commercial launch.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

Top line data from zazosinib's two pivotal Phase III trials, LATATE-three thousand and one and three thousand and two, are expected in the second half of this fiscal year. The rustratide thirty two week top line results were positive, achieving high statistical significance and has been accepted for presentation in early June at ASCO's plenary sessions. Let's review the data that has been shared so far. Polycythemia vera is a hematologic cancer characterized by excessive red blood cell production. The primary treatment goal in polycythemia vera is to keep hematocrit below forty five percent.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

Why? Because higher levels are associated with increased rates of major thrombosis and potential death from cardiovascular events. Rasburtide more than doubled clinical response rates in the Phase III VERIFY study, significantly reducing the primary endpoint of phlebotomy eligibility when compared to placebo plus standard of care. All key secondary endpoints met significant statistical significance, including a threefold reduction in the proportion of ruspatercept treated patients requiring phlebotomy as well as improvements in hematocrit control. Additionally, and very importantly, patient reported outcomes via the PROMIS Fatigue Questionnaire and the myelofibrosis symptom assessment form demonstrated improved quality of life.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

These data represent the most consistent and broad demonstration of patient reported outcomes in PV patients. This is an interesting data point. Throughout the entire thirty two week period, seventy three percent of rasburtide treated patients received zero phlebotomies versus just twenty two percent on placebo plus standard of care, seventy three percent versus twenty two percent. Raspartide additionally was generally well tolerated with overall adverse events and serious event rates comparable between the two treatment arms. The most common events were injection site reactions for respirtide, most of which were mild to moderate in intensity.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

And very importantly, there is no evidence of an increased risk of secondary cancers in the rasvirtide versus placebo treated patients. These results across a range of patients treated with therapeutic phlebotomy or the majority of patients in the study, phlebotomy plus cytoreductive therapy are truly transformative. Takeda will host an investor call on Sunday evening, June one, at seven p. M. Eastern Time for ASCO.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

We hope that you can join. Now let's shift to the importance of disciplined decision making and the connection to pipeline advancement. We continue to make data driven decisions to maintain focus on our most promising pipeline programs, as shown in the bottom half of this slide. These decisions allow us to pivot resources and rapidly advance development of our six late stage programs. The deliberate and thoughtful approach we have taken over the last few years has resulted in Takeda's most robust late stage pipeline in our modern history and is a testament to the successful transformation of our R and D organization.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

The six programs in our late stage pipeline have the potential to deliver transformative benefits to patients while contributing to Takeda's long term growth. We've previously reviewed the major 2025 events for rusburtide, ovaparexton and zazocitinib. And now I'd like to highlight some expansion opportunities we are pursuing across these six programs. Indication expansions are being explored for zazocitinib with important Phase II readouts in 2026 for Crohn's disease and ulcerative colitis. And in addition, a Phase II study exploring zazocitinib's potential to treat vitiligo will start in 2025.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

Elridorcept's proof of concept study in myelofibrosis will read out over the next year, and additional expansion opportunities are under consideration. I'm happy to report that the fasiceran Phase III program is enrolling well, and we are on track for data readout and filing as planned. As I highlighted earlier, fiscal year twenty twenty five is a pivotal year for Takeda's late stage pipeline. In addition to the three Phase III readouts expected in 2025, we look forward to continuing our strong late stage development trajectory with the potential to file five additional indications from this late stage program over the next few years. I am excited to share updates with you as we progress throughout the year.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

Thank you very much, and I will now turn it back to you, Christophe.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Thank you, Andy. And in closing, overall, we are very pleased with what we have achieved in fiscal year twenty twenty four. In a challenging period when we are facing significant generic impact, we continue to deliver on our financial commitments, progress our pipeline and create value for our shareholders. The momentum of our current growth and launch product portfolio will continue to drive our growth through the remainder of this decade, a period during which we face only limited generic exposure until the early 2030s. We are accelerating late stage therapies with potential to generate significant value, including the three new molecular entities with Phase III data readout already completed or expected by the end of twenty twenty five that we shared with you today.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

And we continue to transform the company across our value chain by leveraging data technology and AI. Strong cash flow support this investment and asset specific business development to further enhance long term value and deliver attractive shareholder return. With this strategy, we are laying a strong foundation for Takeda long term growth and the next chapter in our story. In closing, we'll navigate the opportunities and challenge ahead from a position of strength, a position of potential with strong core values and our vision to discover and deliver life transforming treatments guided by our commitment to patients, our people and the planet. These values will guide us well in this fast moving and challenging environment and generate long term value for our stakeholders.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Thank you.

[Moderator]

Christophe Milano, auntie will answer to your questions and also US business unit president Jovi Kim, PDP business unit president, James Bradford, and global oncology business unit president, Telesavie Tati are also joining to respond to you. Please use the raise hand button. And if you participate on the Japanese line, please ask your question in the Japanese language. If you are on the English channel, please ask in English. If you are listening to the original language, you can use either language.

[Moderator]

Please ask up to two questions per person, and you can address your two questions upfront. First question from Citigroup, Yamaguchi san. Start your question. Do you hear me okay? Yes.

[Hidemaru Yamaguchi, Analyst at Citigroup Global Markets Japan Inc.]

Thank you very much. So this is Yamaguchi from Citi. I have two questions. The first question is regarding company guidance, especially our two products. Sorry for the two parts, but the Ntvio sales growth, 9% to year basis and also Vyvanse down by 30% for full year.

[Hidemaru Yamaguchi, Analyst at Citigroup Global Markets Japan Inc.]

Can you give me some upside and downside risk for this one, which was the one of the two products which is going in the different direction compared to your guidance on the last fiscal year? That was the first question. The second question is regarding ovapreston. I think Andres was mentioning about summer data readout. I thought it's my understanding was around June, but I may have misunderstood.

[Hidemaru Yamaguchi, Analyst at Citigroup Global Markets Japan Inc.]

But can confirm that you are a top line results, timing of ATAP A6nine for the Phase III, which is summer? And what is the conference you are referring to after summer for the data release? Thank you.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

You, Yamaguchi san. So the first question on specific outlook for ENTYVIO and Vyvanse, Julie can comment on that. And the second question around specific timing of opaporexant data. Andy, could you please comment on that, please?

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

Thank you, Yamaguchi san, for the question. So I'll take them in reverse order, Vyvanse

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

and

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

then Entycho. So with Vyvanse, as you see, we are expecting further erosion of Vyvanse in The US. At this point, we have 15 generics on the market in The US, and we anticipate that the supply challenges that we saw in the first half of last fiscal year, we would not see those sorts of supply challenges in this upcoming fiscal year. So we expect the erosion to occur more smoothly than it happened last year. So that is why we are guiding towards the decrease in Vyvanse, primarily driven by The US situation.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

We will also start seeing some Vyvanse generics in other geographies, but it's much, much smaller compared to The U. S. Then when it comes to ENTYVIO, in The U. S, we expect to see continued above market growth for ENTYVIO, also driven by ENTYVIO pen further increased access across the continuum for ENTYVIO pen. We continue to see, as you heard from Christophe during the presentation, strong pull through from patients.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

And quarter over quarter, we are adding approximately 1,000 new pen writers each quarter. In our other geographies outside of The U. S, we continue to see strong growth, particularly in our European geography, and we expect that to continue. Thank you.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

Good evening. Sorry, did you want to follow-up?

[Hidemaru Yamaguchi, Analyst at Citigroup Global Markets Japan Inc.]

Yes. No, I'm fine. Thank you. Please go ahead.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

Okay. This is Andy. And I have a big smile, Yamaguchi san, because of course, when you say summer, that includes June. But just to be fair, I suspect that the data are not going to come in the June based on just the timing of the trial. So we've just said summer just to give us some room to ensure that we're coming out with the clearest top line results.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

We've been moving very quickly with this program and are and we continue to drive every step of the process as rapidly as possible. That will include not just the top line disclosure, but also presentations at Scientific Congress. So we will do that as quickly as we can. And we're reluctant at this point to declare which Congress because obviously we need to have an abstract accepted. And so until that's happened, we won't say that.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

But of course, there are relatively limited number of important sleep meetings. So you could probably figure it out by just looking at those few meetings that exist. And then the last comment I'll make along these lines, just to ensure that expectations are set appropriately, There are essentially three parts that will constitute the filing for Ovaprextin in Type one narcolepsy. One will be, of course, these two pivotal Phase III studies. The second will be the safety database that predominantly will come from the long term extension study from our Phase IIb study that we presented last year.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

And then the third will be our CMC package. So right now, we haven't declared precisely when our filing dates and when our expected approval dates will be, but those are the three pieces that will define our timing.

[Hidemaru Yamaguchi, Analyst at Citigroup Global Markets Japan Inc.]

Okay. Thank for the summary. Thank you.

[Moderator]

Moving on to the next question, Morgan Stanley, Murauka san. Please ask your question. Thank you. This is Morocco Morgan Stanley. My first question is about dividends.

[Moderator]

Slight decline in profit, but the dividend is going up by 4 yen We're happy about increased dividend. Compared to JPY 8 increase, this is a smaller increase this time. Going forward, if your performance can be, for example, upgraded, would you maybe get closer to JPY 80 increase in dividend? Would that be possible? That's my first question.

[Moderator]

And my second question is in relation with tariffs, over the next five years, dollars thirty billion investment will be made. I think that's what you said, Christophe, if I heard you correctly. Now local production in The United States will be expanded. Is that the relationship? And also in terms of total capital allocation, do you think this investment will have a major impact, a big impact or not so big an impact in your assessment?

[Moderator]

Those are the questions.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

So the first question on the dividend, why JPY4 and if there is an upgrade to guidance, is there any room to increase that further? I'd like to ask Milano to answer that question. And then the second on tariffs, Christophe mentioning $30,000,000,000 of investment in The U. S. Over the next five years.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Could you please explain a little more in detail what that refers to? Christophe, if you could take that second question.

[Moderator]

Thank you very much, Minoka san, for your question. This is Firuta speaking. With regard to dividend, I have to actually repeat myself. Progressive dividend policy is applied. And core EPS, reported EPS and free cash flow, we will monitor those factors and make decisions accordingly.

[Moderator]

Over the last two years, yes, we increased the dividend by JPY 8. And based on the current core PS, the payout ratio is about 40%, which is quite competitive in this industry. That is our assessment. And reported EPS, while going forward, we will see a shrinkage in amortization. So we expect the number to improve.

[Moderator]

But currently, we have not really reached the JPY 200 level yet. So we have to consider all these different factors and this is why we have decided to increase the dividend by four this time. Now going forward, how quickly can we move to a further increase in dividend? Well, core EPS, reported EPS and also free cash flow, especially cash flow and deleveraging outlook. All of these factors will have to be taken into account and the decisions need to be made every year accordingly.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Thank you, Markus and for your questions. As you now understood, we have a very significant presence in The U. S. This is why we have actually potentially a low exposure to tariff. We have a massive manufacturing network in The U.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

S. We have a very significant presence when it comes to our R and D, for example. And so when I said that we will invest €30,000,000,000 in the next five years, this is not new. We this is to maintain this presence. This is to continue to develop the company.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

This is to make sure that our manufacturing sites are upgraded up to the best efficiency and productivity. Our R and D this €30,000,000,000 include our R and D spend in The U. S. So this is not a new change of strategy, but it is to illustrate that as a global innovative pharmaceutical company, we have a very strong presence in The U. S, which is by far today the country which is so important for developing biopharmaceutical innovation, but also a country very important to reward innovation as well in terms of its market.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Thank you.

[Moderator]

Next question is Steven Barker, Jefferies.

[Stephen B, Managing Director at Jefferies]

Yes. Thanks, Steve Barker from Jefferies. The first question is for Andy regarding zasocitabine. Could you please explain your decision to choose vitiligo as the next indication for development with reference to the unmet need, the competitive environment and mechanistically why a TYK2 inhibitor might succeed in this indication? And my second question is for Julie Kim, whom I'd like to congratulate on being chosen to become the next CEO.

[Stephen B, Managing Director at Jefferies]

Perhaps you could tell us something about what you expect to be able to bring to this role. Thank you.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

Stephen. Good morning, good evening. It's Andy. So the question about our indication expansion strategy for sacitamab and why vitiligo. So when we brought the program in, we were committed to the four core indications that are now that now we have great momentum behind psoriasis, psoriatic arthritis, ulcerative colitis and Crohn's disease.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

We undertook a very extensive effort a combined effort, obviously, between the R and D organization and our commercial organization, looking for indications that would make most sense. And the mechanism is a ubiquitous it's a ubiquitous signaling molecule involved in many different inflammatory pathways with very strong human genetics that point to many potential indications. And so we established a rubric by which we have built our decision tree off of. So one is where do we think that we have the greatest likely of scientific success two, how long and how costly is development and then three, unmet medical need and commercial opportunity. And so when we shifted through that funnel, we went from literally dozens of very exciting and potentially scientifically interesting indications to a handful of potential indications.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

And a few have risen to the top. I don't think we'll stop at vitiligo, by the way. I think that there'll be more to come, and we'll share with those with you later. But vitiligo shifted to the top because, A, there's very strong scientific rationale, both the genetics of this overall pathway suggests a role in vitiligo that we know that interferon signaling, for example, is involved in driving the skin lesions in vitiligo and TYK2 is a prime mediator of interferon signaling. It's actually a fairly prevalent disease across the world.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

It's highly unmet in terms of medical need. And it's the kind of disease where because there isn't there aren't existing therapies, I think we don't realize the amount of lifestyle and health devastation that comes from this disease. So we think that the upside opportunity is quite high. Of course, we have to demonstrate this is a proof of concept. It will be a dose ranging proof of concept study that we're in.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

So we have to, of course, demonstrate benefits, but we're quite excited about the possibility.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

And thank you, Steven, for your kind comment. It's truly an honor to be the incoming CEO for Takeda. And I will share with you a couple of comments. But obviously, as it's still quite a bit of time away, I won't provide any details until next year. So first and foremost, as a member of the executive team, I've been involved in all of strategy discussions to date, and so this is not going to be a situation where there will be a a massive overturning of the existing strategy.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

My intent is to honor the legacy of Takeda and and the legacy that Christophe will be leaving behind next year, but also looking to the future and taking the time to listen to stakeholders, internal, external, to understand what they would like to see from Takeda and incorporate that into what I will share next year as a direction forward for the the company. So I guess stay tuned, and you'll hear more from me next year.

[Stephen B, Managing Director at Jefferies]

Thanks, Julie and congratulations and thanks very much, Andy.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Okay, thank you, Steve for your question. Okay, I'd like to move on to the next question please from TD Cowen, Mike Nadelkovich. Please unmute and ask your question. Hi, Mike. We can't hear you.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Mike, are you are you unmuted?

[Michael Nedelcovych, Director - Equity Research at TD Cowen]

Yes. Can you hear me now?

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Yes. Okay. We got you.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Perfect.

[Michael Nedelcovych, Director - Equity Research at TD Cowen]

Apologies. Sorry for that.

[Michael Nedelcovych, Director - Equity Research at TD Cowen]

Thank you for the questions. I have two. One relates to the Ovaporextin potential launch. I imagine there are only so many prescribers when it comes to narcolepsy and the advantages of Orexin replacement should recommend themselves. So my question is whether this could be one of the most successful drug launches in recent history.

[Michael Nedelcovych, Director - Equity Research at TD Cowen]

Assuming Phase III replicates what we saw in Phase II, should we expect oviporexin to take off like a shot? And if not, then why not? And then my second question relates to GADEX. It looks like timing of generic entry is still unknown, and you are forecasting a healthy number for fiscal twenty twenty five. How durable do you think this revenue could be?

[Michael Nedelcovych, Director - Equity Research at TD Cowen]

Thank you.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Thank you, Mike. So the first question on sort of thoughts on the Ovaprextin launch trajectory and then the second question on durability of GATX. So Julie, could you take both of those questions, please?

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

Yes. Thank you, Mike, for those questions. And like before, I will take them in reverse order. So yes, you have noticed that we do expect competition still, but it is delayed. And this is an area where we do believe beyond the actual medicine itself, there is a lot of support needed for this patient population.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

And so a significant amount of patient services support is critical to supporting the the the treatment experience. And so we do expect that GATTX will not have the typical erosion curve once generic comes as well as from competition. So we do expect there to be longer lasting revenue stream from from Gatex. In terms of Ovaprextin, I would look at this in a couple of different ways. One, we still have a diagnosis challenge for narcolepsy type one, so there will be an effort around appropriate diagnosis of narcolepsy type one because oviparaxin will be indicated in type one, and current therapies are indicated in type one, type two, and in IH.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

So the the first aspect is the diagnosis of narcolepsy type one. But as you point out, with hopefully phase three replicating the the type of data that we saw in phase two, we do expect there to be, significant demand for oviparaxin given the type of efficacy we hope to see. Now that being said, we will have to make sure that we have all of the programs in place to ensure smooth access, in this in this space, and there is a lot of standard therapies that are much cheaper that we will have to work through from an access standpoint. But fundamentally, we are really excited about the opportunity to launch Ovaporexin. The US will be the first market to to launch, and we're looking forward to it.

[Moderator]

Numero Securities, Matsubara san. Please ask your question. Yes, this is Matsubara, Numero Securities. Can you hear me okay? Yes, we can.

[Moderator]

Thank you. I have two questions. First question is about the tariffs. So manufacturing sites you have disclosed today, I think that gave us some sense of comfort. But is there anything you can comment about IP?

[Moderator]

And the second question is about Entymeo. So PENN is useful. I understand you are increasing number of new patients, but reimbursement is the bottleneck. So when do you think we will see PENN contributing in a great way, big way? And Ms.

[Moderator]

Creasy is also there. What about second line market share currently? That's my question.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Okay. So the first question to Christophe around tariffs. Do you have any specific commentary around the location of our intellectual property? And then the second question on Entyvio Pen around the reimbursement challenges that Christophe referred to in the call. When do we expect an uptick in reimbursement?

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

And how do we see usage being used in the second line given the competitive landscape? I'd like Julie to answer that second question, please.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Yes. Thank you, Matsubarasen for the question. I think it's a very relevant question. You define the potential tariff impact with based on your manufacturing network. You have seen that it's located mainly in U.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

S. And Europe, Japan. But also, you are right where your economic IP is located. And in our case, it's mainly located in U. S.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

And Japan. We have never over optimized our economic IP in low tax location where you need also to have a manufacturing site in order to leverage that. We have done it, but we have not done it very, very significantly. That's also why our tax rate is in the low 20s and not in the mid 10s, for example, like some other companies. But this is today helping us in a way to have a lower potential tariff exposure.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

Sorry, I had started talking, forgotten to take myself off mute. Your question, thank you, Monsvara san, in terms of Entyvio and where we are with reimbursement and whether or not we're targeting second line, I believe, was the other part of your question. So for Entyvio, we really target first line usage because of the the profile of Entyvio and its gut selective and its safety and efficacy track record. And so really our focus is on making sure that Entyvio is the the first choice when moving to advanced therapy in IBD, particularly in UC, but also in CD. And in regards to Penn, again, here, this is where we do see patients who are, coming on to advanced therapy for the first time, that there is a strong preference for moving to Penn, and it is about making sure that at the local level, we work through all of the the details to make sure that there's smooth experience in transition for the the patient.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

And so quarter over quarter, as I mentioned in in response to an earlier question, we are seeing an increase in the number of subscribers that we are seeing, and we also have very positive feedback in terms of the patients who do go on to to Penn and that they have a strong preference for it. So so we do expect this to continue to increase, and we are still targeting our overall objective of having fifty fifty split in terms of IV and PENN4 and TIVIO. Thank you.

[Moderator]

Next question. Wakao san, JPMorgan, please.

[Seiji Wakao, Senior Analyst at JP Morgan]

Hi. Thank you. I have two question. First, about most favored nation policy in US. So there has been discussion of around drug price deductions and the most favored nation policy in US.

[Seiji Wakao, Senior Analyst at JP Morgan]

If such a policy were implemented for Medicare and Medicaid, how do you assess the potential impact of MSL on your US business?

[Moderator]

And the second question, I'd like to ask a question to Milano. The first quarter, the gross margin rate is higher than my forecast. What is the reasons of the improvement for the fourth quarter number and also the planned number for this fiscal

[Moderator]

year?

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

On potential impact of most favored nation, Julie can answer about that. And then the second question on gross margin improvement to Milano, please.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

Thank you, Wakalisan, for the question on MSN, our most favored nation. As you have probably seen, it's a very dynamic time here in The U. S, and this is a significant topic of discussion with the pharma board, which met this week and also met last week as well. So this is an area that where when you think about MFN as a concept, it is a very challenging concept to apply in The US because the health care system here is fundamentally different than the health care system where the pricing is being pulled from. And so, basically, it is a price control being applied in The US setting when The US health care system is not set up for that, and there's structural differences, particularly when you look at things like the middlemen with PBMs and with other programs such as three forty b.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

So overall, from an industry perspective, if MFN were applied within the Medicaid setting, which of course then trickles through to three forty b, that would be an industry impact over ten years of up to $1,000,000,000,000. And so it it would fundamentally be a significant challenge for the overall industry, Takeda included. And so when you look at the what the US government is trying to do, we think that there are better ways to encourage manufacturing investment in The US, r and d investment in The US, and to support continued innovation through the biopharmaceutical industry in America. And so MFN would would not be the appropriate way to to do it, and it would be a significantly challenging situation for the whole industry, including us to to manage.

[Moderator]

Thank you for your question. Regarding the gross margin. First of all, regarding the actual gross margin in the fourth quarter, usually in the fourth quarter, because of the seasonality, we see the trend of a downturn. And in FY 'twenty four, Q4, we saw almost the same trend. And if you compare this number to the numbers up to the third quarter in the FY 2024, there have been some accumulative FX impact onto the inventory and that valuation method has been changed.

[Moderator]

Therefore, as a result, compared to the period up to the Q3 and Q4 numbers, you may have thought that they look different. But actually, there wasn't much differences and actually the landing was in line with what we gave guidance. Regarding FY twenty twenty five forecast, points for the potential trend of the gross margin. One is the product mix and the other is FX. The how much impact it will be on to the inventory, we changed the calculation method, as I mentioned earlier.

[Moderator]

For the first point, the growth of gross and the launch products and the Vyvanse LOE offset. And relatively speaking, the product mix impact on to the gross margin is going to be neutral. Whereas in FY 2024, we posted differences from the calculation was sort of change regarding the FX impact on to the inventory and comparing FY 2024 and 2025, this would work to improve the numbers. That's all. Thank you very much.

[Moderator]

I could understand very well.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

And well, Kao san, I just wanted to add one more comment to your question rather than leaving it hanging as I did. Both the Pharma Board as well as individual companies, Takeda included, are putting in significant efforts to work with Congress in terms of making sure MSN is not a policy that is included in the reconciliation package. There are other pay force that pharma as an industry believe would meet the needs of of the government's request here. And at this point, we will continue to to support other policies beyond MFN as it as a way to control either pricing and or provide a pay for in terms of the pill penalty fix, which is what started this initial conversation. Thank you.

[Seiji Wakao, Senior Analyst at JP Morgan]

Thank you, Albert. Thank you very much for your excellent answer. I understand it very well.

[Seiji Wakao, Senior Analyst at JP Morgan]

Thank you.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Thank you, Wakao san. Okay. Moving on to the next question. I'd like to take the next question from Tony Ran at Macquarie. Tony, please unmute and ask your questions.

[Tony Ren, Head - Asia Healthcare Research at Macquarie]

Hello. Can you hear me?

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Yes, Tony. We hear you.

[Tony Ren, Head - Asia Healthcare Research at Macquarie]

Okay. Perfect. Yeah. Thank you for the opportunity. Yeah.

[Tony Ren, Head - Asia Healthcare Research at Macquarie]

I the first one is for Christophe on going back to going back to the possible impact of tariffs on last slide number six. I think I heard you saying that customs value in The US, when you compare the customs value to The US revenue, it's about let me go to slide number six here, 8% or so. Feels 8% to 10%. It feels a little bit lower than I would have anticipated. Obviously, you guys do not disclose gross profit margin by region.

[Tony Ren, Head - Asia Healthcare Research at Macquarie]

But but at the company level, it's about roughly 65%, which implies about 35 COGS as a percentage to revenue. And there was also a question about the IP, which relates to transfer pricing. So could you help me understand how can I juxtapose COGS transfer price and customs value? So that's a question for us for slide number six. Another question is that that in your 2025 guidance, you budgeted roughly a hundred 30,000,000,000 worth of negative impact from Medicare Part D redesign and three forty b drug price program.

[Tony Ren, Head - Asia Healthcare Research at Macquarie]

This is a pretty big number. So I just wanna see what are the drugs that are affected. And if you could just briefly explain mechanistically how how how you arrived arrive at the JPY130 billion, that would

[Tony Ren, Head - Asia Healthcare Research at Macquarie]

be great. Yes. Thank you.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Thank you, Tony. So the first question around tariffs and the customers value impact. So Christophe can start that answer. And the second question on impact from Part D and 340B to Julie, but perhaps Milano could also jump in to add any comments as well. Christophe?

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Yes. Thank you, Tony. This is exactly why we wanted to disclose this analysis to you guys so that you don't make wrong assumptions. 50% of our total revenue is in The U. S.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

But the value of import from Europe, Japan and Singapore because this is where we can only import drugs from is eight to 10% of the total U. S. Revenue. Why 8% to 10%? Because one, there are many drugs that we manufacture in The U.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

S. So they are not they are excluded, if you like, from any import and tariff. So ENTYVIO is a good example. ENTYVIO is manufacturing is in The U. S.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

So Pantivio is not subject to tariff for example. So you need to exclude all the product which are manufactured in The U. S. That's the first thing. And then after that, you need to consider the type of transfer price that exists from Europe to The U.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

S, for example. And as we mentioned, our IP mainly is located in U. S. And Japan. So we don't have a significant optimization of our tax through a transfer price.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

So that's why we wanted to share with you this simple math because you do if you want to sort of modelize what could be a tariff impact, we will see how things are evolving. For example, if you take U. S, you take 50%, you take the revenue U. S, you multiply by 8% to 10% and you multiply that by an average tariff, let's say, if it is Europe or Japan. I think that's how you're to end up with a number.

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Same in China. In China, the value of import from The U. S. Is 10% to 12% to 15%. Why?

[Christophe Weber, President, CEO & Representative Director at Takeda Pharmaceutical Company]

Because many products that we export to China or that China imports come from Japan or from Europe and not from U. S. So I think this is very important to have this number to sort of scope what could be the tariff impact. And this is why we believe that we have a we do have potential exposure, but quite limited.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

Hi, Tony. I'll try to address the question around both Medicare Part D redesign and 340B and then maybe Milano can jump in to talk about the total impact on the company financial picture because I think that was the other part of your your question. So for Medicare Part b redesign, so this is one of three areas within the inflation reduction act that impacted the pharmaceutical sector. And so for Medicare Part d, just as a quick refresher for everyone, there was a significant shift of the government's responsibility, over to payers and manufacturers. So that piece that comes over to the manufacturers on the Medicare side, this is what you are now seeing the the full year impact for in our f y 25 numbers as that went into effect in January of this year.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

So so that's what you're seeing flowing through. Three forty b is a program whose initial intent was to help provide support, relief, I would say, for hospitals that are taking care of uninsured patients in The US. And this has expanded from the initial roughly 100 hospitals to over 2,000 hospitals that now use this program. And it has turned into a markup program where the hospitals receive the medicines at a very discounted rate, and then they mark it up and and keep the the the difference. This program is growing exponentially.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

It is the largest and the fastest growing government program of its kind. And so this is having a significant impact on our ongoing revenues as the three forty b program continues to expand. So so those are the drivers of those two different components. One is the full year impact of the Medicare Part D redesign for the first time, and then second is the growth of the three forty b program in The US.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

So, Tony, if I if I add a little bit, as Julie explained, this both three forty b expansion and party redesign are working in a way to increase the manufacturers, you know, pharma companies contribution or in the in the form of the rebate. So the this this this will increase the rebate for the revenue, which are kind of realizing through this Medicare Part D and 340B. So the expansion of these two channels or the incremental rebate through the Part D is going to basically increasing the rebate in gross to net in The U. S. Revenue.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

That's the impact we are projecting if we compare the versus FY '24, it's going to be almost 1,000 sorry, 130,000,000,000 yen impact. It's almost like incremental gross to net or the rebate in a U. S. Business. That's how the mechanistically impacted our financials.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

I just want to add one commentary tariff impact, Christophe explained. So even if you do the math, this impact is a potential impact of the kind of annualized impact. So the amount you get by multiplying these factors would be the potential exposure to tariff and an actual maybe financial impact, even if the tariff is supplied to the order, the non U. S. Country origin products, the financial impact would be more or less sorry, less because of the first timing.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

And then also we have some inventory on the hands. And then we have some mitigation measurements to manage the inventory and the supply chain. So please don't translate directly to amount you calculate to a potential FY '25 impact. This is going to be the potential annualized impact if the tariff becomes applied to all the non U. S.

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

Contribution products.

[Tony Ren, Head - Asia Healthcare Research at Macquarie]

Yes. Thank you, Christophe, Judy and Milano. Just a quick follow-up on the 130,000,000,000 yen impact, right, gross to net. Is this number heavily concentrated on a few drugs, or is it fairly widely dispersed?

[Milano Furuta, CFO & Director at Takeda Pharmaceutical Company]

It's it's across across the products.

[Tony Ren, Head - Asia Healthcare Research at Macquarie]

Okay. Very good. Yeah. Thank you very much.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Okay. Great. Thank you, Tony. So then moving on to the next question. So I'd like to invite the next question from Goldman Sachs, Ueda san.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Ueda san, please unmute and ask your question.

[Moderator]

This is Ueda, Goldman Sachs. I have two questions as well. First question is about R and D expense, level of R and

[Moderator]

D expense.

[Moderator]

FY 'twenty four, year on year, I think yen was weaker, but on yen basis, I think the expense was flat. And going forward, do we expect this to stabilize? Progress of clinical program and also the efficiency program? Do you have any specific outlook or guidance that you can share about how this may change? The second question is about margin outlook.

[Moderator]

For FY 2025 plan, Viburn's revenue or sales is still remaining. We still have a substantial sales. Do we see the bottom up of margin? When should we expect that? That's my question.

[Moderator]

So efficient program and the LOE balance. Based on that, core OP of 30 percentage, when do we see this happen? When do you think it will progress to that level? That's my question.

[Moderator]

Thank you.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Thank you, Ueda san, for those questions. So the first on the outlook for the R and D budget and the second on our margin outlook. So Milano can answer both of those questions. Milano?

[Moderator]

Thank you, Ueda san, for your questions. With regard to R and D expenses, what is the current trend? What is the outlook? For FY 'twenty four, we had multiple factors. As we said before, some programs progressed.

[Moderator]

Actually, many of them progressed to Phase three. Therefore, the clinical development cost has increased. But at the end of FY 2023, we did prioritize the programs in R and D. This meant that some of the programs were discontinued and the expenses went down as well. And for FY '24, we also implemented the efficiency program.

[Moderator]

So these are the three factors resulting in smaller R and D budget in FY 2024. Now moving to FY FY 2025 and beyond, as we have explained in our guidance,

[Moderator]

R and

[Moderator]

D will accelerate, which means that R and D expense going forward will continue to increase over time. For FY 2025, we will continue to implement efficiency program. And there'll be some carryover impact of the efficiency programs implemented in FY 'twenty four. So we want to be able to offset by increasing R and D costs that way. With regard to outlook, upper margin, as we are a biopharmaceutical company, low to mid-thirty percent, more than 30% core OP should be our continuous target.

[Moderator]

And it will be. But in terms of margin improvement, the shape of the curve may look a little bit different from what we saw one year ago. And there are some reasons behind this. FY24, to begin with, was already high in terms of core OP. We landed at high level.

[Moderator]

And also, Viadence generic, however, impact was pushed out to FY '20 '20 '5. And as somebody else asked earlier, pricing pressure was relatively high as well. So acceleration of development is the biggest factor. In order to continuously improve the margin over time, we need to make sure that new product launches are successful and this is most important factor and most important driver. And therefore, we will continue to invest into that.

[Moderator]

But we also want to improve the margin as well. So this is why we want to continue the efficiency program. So that we can fund the investment. I understand. Thank you very much for your answer.

[Moderator]

That's all from me. Next is Sakaisan, UBS Securities, please.

[Fumiyoshi Sakai, Analyst at UBS Group]

Hi. This is Sakaisai from UBS. So two questions. The one is I I like specifically ask your PDT business. How much business is based on purely in The US brand?

[Fumiyoshi Sakai, Analyst at UBS Group]

Then when you counted the impact of tariff, did you count those equipment, correction equipment, and other machinery tools that your suppliers import from outside Japan? Oh, sorry. Not outside from Japan. Outside from US. That's first question.

[Fumiyoshi Sakai, Analyst at UBS Group]

The second question is for Samsung, as always. And look at page 26. I'm sorry if I missed your comment about the the the

[Fumiyoshi Sakai, Analyst at UBS Group]

the

[Fumiyoshi Sakai, Analyst at UBS Group]

development program, but now you are launching this head to head dukra trial ahead of the readout in the second half f I twenty five. Now I saw the J and J press release. They've got very good. I think that was c d 23. New new program.

[Fumiyoshi Sakai, Analyst at UBS Group]

Right? And they they they are launching head to head with injectables. This is oral. Therefore, that change your kind of development strategy here for the sotinib going forward. That's my second question.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Thank you, Sarkay san. So the first question on PDT geographic footprint and how we thought of that in the tariff impact. So perhaps Giles can begin by with an overview of the geographic impact, and then Milano can follow-up with any specifics on the tariffs. And then the second question on zazosinib head to head and future development strategy. Andy can take that question.

[Giles Platford, President of the Plasma-Derived Therapies Business Unit at Takeda Pharmaceutical Company]

Thank you, Saket san for the question about 60% of our PDT revenues are U. S. Domestic sales. And with regards to your question pertaining to the sourcing of equipment ex U. S.

[Giles Platford, President of the Plasma-Derived Therapies Business Unit at Takeda Pharmaceutical Company]

And impact from tariffs, we continue to evaluate that. And we feel confident that we can manage the continued supply of equipment to The U. S. In our current understanding of the tariffs that have been already announced. Thank you.

[Christopher David O'Reilly, Global Head of Investor Relations at Takeda Pharmaceutical Company]

Perhaps to Andy then for the Zazo question.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

Yes, great. And Sakai, thank you very much for question. So since we brought Zazacitinib in, we've been keen to we believe for many reasons, it's truly a best in class TYK2 inhibitor based on its selectivity, based on its once daily dosing with full twenty four hour coverage against TYK2. And of course, based on the data that we've seen so far in two of our Phase IIb studies. And so we're being keen to demonstrate in a head to head study into against dukavacitinib that in fact, we do have the best TYK2 inhibitor.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

And we're keen to start that study. And as we mentioned previously, the two Phase III studies in psoriasis will read out later this year. We're in the process of collecting a very substantive safety database to support the filing, and we're preparing for our manufacturing for commercial launch. All of that will be the basis of our filing. DUKO comparator study head to head study will not be a part of the initial package.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

Our goal is for that to come out at the time of launch to support our overall messaging and differentiation package. I'd like to hand it over to you, Julie. Maybe you can talk a little bit about the access considerations in the competitive landscape.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

Sure. Thank you for the question around the head to head. So first, as Andy said, we do believe that it is important to have the head to head with DUCRA to be able to demonstrate the differentiated profile within the TYK2 space. But as you pointed out, the J and J compound is also looking at head to head and a different type of head to head. We do believe that having two strong efficacious orals will be a benefit to growing the oral segment within the psoriasis treatment landscape.

[Julie Kim, President of the U.S. Business Unit & U.S. Country Head at Takeda Pharmaceutical Company]

And so we will continue to address and look at the different ways of differentiating zazacitinib so that we can best support it at launch.

[Fumiyoshi Sakai, Analyst at UBS Group]

Okay. So the and the compound, IAS twenty six. Sorry. I missed that. And just to confirm, I mean, everything in budget.

[Fumiyoshi Sakai, Analyst at UBS Group]

Right? Just everything in this year's budget is head to head

[Fumiyoshi Sakai, Analyst at UBS Group]

and going forward.

[Andrew Plump, President - Research & Development & Director at Takeda Pharmaceutical Company]

It's that's correct.

[Fumiyoshi Sakai, Analyst at UBS Group]

Alright. Thank you very much.

[Moderator]

Thank you very much. With that question, we are reaching the time to close. So so much for q and a. And with this, we would like to close today's webinar. Thank you very much for joining us today in spite of our review schedule.

[Moderator]

We hope that you continue to support Takeda. Thank you.

Participants

Executives

• Christopher David O'Reilly, Global Head of Investor Relations
• Christophe Weber, President, CEO & Representative Director
• Milano Furuta, CFO & Director
• Andrew Plump, President - Research & Development & Director
• Julie Kim, President of the U.S. Business Unit & U.S. Country Head
• Giles Platford, President of the Plasma-Derived Therapies Business Unit

Analysts

• Moderator
• Hidemaru Yamaguchi, Analyst at Citigroup Global Markets Japan Inc.
• Stephen B, Managing Director at Jefferies
• Michael Nedelcovych, Director - Equity Research at TD Cowen
• Seiji Wakao, Senior Analyst at JP Morgan
• Tony Ren, Head - Asia Healthcare Research at Macquarie
• Fumiyoshi Sakai, Analyst at UBS Group