Takeda Pharmaceutical Q1 2026 Earnings Report

Takeda Pharmaceutical EPS Results

• Actual EPS: $0.52
• Consensus EPS: $0.47
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: N/A

Takeda Pharmaceutical Revenue Results

• Actual Revenue: $7.45 billion
• Expected Revenue: $7.96 billion
• Beat/Miss: Missed by -$505.22 million
• YoY Revenue Growth: N/A

Takeda Pharmaceutical Announcement Details

• Quarter: Q1 2026
• Date: 7/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 6:00AM ET

Takeda Pharmaceutical (NYSE:TAK) Company Limited 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 Q1 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Q1 revenue fell 8.4% (–3.7% CER) and core operating profit declined 15.8% (–11.9% CER) due to Vyvanse generic erosion, though the company expects this impact to moderate and kept its full-year guidance unchanged.
• Positive Sentiment: Launch products grew 5% at CER in Q1, led by Entyvio (+4.9% CER) and TAKHZYRO, with Entyvio Pen access expanding and HAE prophylaxis market leadership strengthening.
• Positive Sentiment: Pivotal Phase III studies of ovaprextin in narcolepsy type 1 met all primary and secondary endpoints, normalizing wakefulness and cataplexy rates, with U.S. NDA filing planned later this year.
• Positive Sentiment: Pipeline momentum includes practice-changing Phase III rusfertide data in polycythemia vera, Phase III starts for zazocitinib vs deucravacitinib and eltircep, plus new approvals for ADCETRIS, HYQVIA and GammaGuard ERC.
• Neutral Sentiment: The company generated strong adjusted free cash flow (¥190.1 billion) in Q1 and completed leverage-neutral bond issuances, maintaining a manageable debt maturity profile over the next three years.

Presentation

[Moderator]

Head of IR, my name is O'Reilly. Thank you for this opportunity. And I would like to explain about the language setting to begin with. Please find the language selection button at the bottom of your Zoom window. If you wish to listen in Japanese, please select the Japanese channel.

[Moderator]

If English, please choose the English channel. And if you want to listen to the original, please turn 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]

Such, I would 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. Factors that could cause our actual results to differ materially are discussed in our most recent Form 20 F and in our other SEC filings. Please also refer to the important notice on Page two of presentation regarding forward looking statements, non IFRS financial measures, which will also be discussed during this call. Definitions of non IFRS measures and reconciliations with comparable IFRS financial results are included in the appendix to the presentation.

[Moderator]

Now we would like to begin. Presentation will be given by Christoph Weber, President and CEO Mirano Fruta, Chief Financial Officer and Andy Plum, R and D President. And this will be followed by Q and A session. Let us begin.

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

Christophe, over to you, please.

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

Thank you, Chris, and thank you, everyone, for joining us today. Our fiscal year twenty twenty five first quarter results reflect the significant impact of Vibant's generic erosion on revenue and operating profit, which we had anticipated. We actually expect this impact to moderate in future quarters, and fiscal year twenty twenty five would be the last year of significant impact from Vyvanse erosion. There is no change to our outlook for the full year. Milano will discuss our financial results in detail in his presentation.

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

Fiscal year twenty twenty five is a pivotal year for Takeda, not least because of our rapidly progressing late stage pipeline. I'm very pleased with our pipeline progress so far and excited about the future. As you know, earlier this month, we announced positive result from two pivotal phase three double blind placebo controlled studies of oviporexton. Both studies met all primary and secondary endpoints at each of the dose we studied. We are very encouraged by this result and what they could mean for people living with narcolepsy type one.

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

Later on this call, Andy will walk you through the top line results, what you can expect next with oviporexant on our Oryxin franchise, as well as other pipeline achievements since q four. Before we dive deeper into our pipeline strategy, I will pass over to Milano to review our financial results. Milano?

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

Thank you, Christophe, and hello, everyone. This is Milano Bruta speaking. Let's go to Slide five, which summarizes our Q1 financial results. As we had anticipated, Q1 is highly likely to be the quarter most impacted by loss of exclusivity because of the strong Vyvanse performance in Q1 fiscal year twenty twenty four. This created a high comparator baseline for growth rates in Q1, but we expect this to moderate over the rest of the fiscal year.

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

Revenue in Q1 this year was just over JPY 1,100,000,000,000.0, a decrease of 8.4% or minus 3.7% at constant exchange rates or CER. Core operating profit per OP was JPY 321,800,000,000.0, a year on year decrease of 15.8% at actual FX or 11.9% at CER. Reported operating profit was JPY 184,600,000,000.0, which grew 11%. Core EPS and reported EPS were JPY 151 and JPY 79, respectively. Cash flow was strong this quarter with adjusted free cash flow of JPY 190,100,000,000.0.

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

Slide six shows our growth on launch products, which represents 50% of revenue. In Q1, they grew 5% at CER. We see it as a little bit slow start, but we anticipated a higher growth rate in subsequent quarters. In GI, Entyvio growth was 4.9% at CR, partially reflecting intensified competition in diabetes market. We do see increasing number of active EntyvioPem patients in The U.

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

S, growing approximately thirty percent since the last quarter. Awareness, prescription and satisfaction level for Entyvio Pen are high, and our focus is to reduce complexity along the reimbursement and authorization pathway. As access for the pen expands, we expect a higher growth rate for Entyvio in the coming quarters. In rare diseases, TAKHZYRO continues to grow as a market leader in HAE prophylaxis. In our PDT portfolio, there were some phasing impact in our Q1 results.

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

This is quite common in PDT, where we often see fluctuations on a quarter to quarter basis. We expect both IG and albumin to grow by single digit for the full year. In oncology, prazacla continues to expand as we roll out global launches. In vaccines, QDenga was impacted by the timing of product shipments as well as transactional effects, mainly the euro appreciation against the Brazilian real. Cuydenga volume is increasing, and we still expect to deliver strong growth for the full year.

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

Slide seven shows year on year revenue performance for the total company. Although our gross and launch products are expanding, we had a significant impact this quarter from Vyvanse generic erosion. Last year, there was a strong rebound in Vyvanse revenue in Q1, mainly due to generic supply constraints in The U. S. And the growth ex U.

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

S. Ahead of loss of exclusivity. This resulted in a high year on year comparator for Q1 this year. We saw the generic supply situation in The U. S.

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

Improved from Q2 last year and the generic launches in Canada, Germany and Brazil last summer. This means we expect less headwind from Vyvanse from next quarter onwards. Vyvanse was a main driver of our revenue decline of 3.7% at CER, in addition to some impact from Medicare Part D redesign. FX was also a headwind this quarter due to appreciation of the Japanese yen against major currencies. Slide eight shows a year on year bridge for cooperating profit.

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

You can see that the LOE of high margin Vyvanse was the main reason for the year on year decline of 12% at CER. This was partially offset by operational efficiencies from the enterprise wide efficiency program we initiated last year, in particular, in R and D spend. Next, reported operating profit increased by 11% versus prior year, mainly due to lower impairments and restructuring expenses. Slide 10 is our latest debt maturity ladder. In June and July this year, we executed two leverage neutral bond issuances, one in Japanese yen and the other in U.

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

S. Dollar. To pay off the short term funding, we raised to prepay syndicated loans in March 2025. We had to prepay these loans to streamline our upcoming maturity profile in terms of both duration and currency mix. Of note, these new U.

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

S. Dollar bonds generated significant demands more than four times the 2,400,000,000.0 that we finally issued. This enabled us to secure favorable terms. In addition to these refinancings, we also repaid debt that's matured in Q1 this year, including an million dollars bonds. Over the next three years, our average annual maturity is now approximately JPY $220,000,000,000, which we believe is manageable considering our cash flow outlook.

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

Slide 11 shows our full year outlook for FY 2025, which is unchanged since May. As we have explained today, Q1 was significantly impacted by Vibram's generic erosion, but this was within our expectation, and we are not changing our management guidance. Finally, a word on tariffs. Our FY twenty twenty five outlook does not reflect the potential impact of tariffs. And in general, we believe that we are well positioned to manage the potential impact at this time.

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

This slide is the same as we showed at Q4. And I would like to emphasize again, that the value of our imports into The U. S. Is approximately 8% to 10% of our US revenue. And the vast majority of this comes from Europe.

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

The tariff rate, let's say 15%, would be applied to this number once it becomes effective. 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. Hello to everyone on today's call. I'm very excited to begin with the impactful update we have on ovaprextin. Narcolepsy Type one is a neurologic disorder caused by the loss of orexin producing neurons in the brain. It is characterized by daytime symptoms like excessive daytime sleepiness, cataplexy, cognitive effects such as lack of sustained attention and nighttime symptoms like sleep paralysis and disrupted nighttime sleep, which all have a substantial impact on patients' ability to function as well as quality of life.

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

As we communicated earlier this month, both Phase three studies met all primary and all secondary endpoints demonstrating statistically significant and clinically meaningful improvements at week twelve across all symptoms at both BID doses. These doses were chosen to provide flexibility for physicians and patients to manage daytime and nighttime symptoms. The p value you see on this slide of less than 0.001 does not do justice to the statistical significance of the trial. Often results had many more zeros before the one. Ovapraxin is on track to be the first in class and potentially best in class orexin-two receptor agonist that treats the underlying orexin deficiency and has the potential to establish a new standard of care in NT1.

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

In two Phase III trials, Ovaprexin demonstrated the ability to normalize the majority of treated patients across almost all NT1 symptoms. Improvements in excessive daytime sleepiness were measured using the Maintenance of Wakefulness Test and the Epworth Sleepiness Scale. MWT is a test used for regulatory purposes where patients are kept in a dark room and asked to stay awake for four forty minute sessions. It is best accompanied with subjective endpoints like the Epworth Sleepiness Scale that describes how well patients respond to treatment. Most of the patients on oviparaxin achieved normal ranges for both the MWT and the Epoid Sleepiness Scale.

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

Cataplexy is a very important endpoint for patients and regulators. We were thrilled to see that it was so significantly improved across all doses as measured by weekly cataplexy rate questionnaires. Cognitive benefits like sustained attention were recorded using the psychomotor vigilance test. And finally, the benefits to patient satisfaction and quality of life were recorded using surveys like the Short Form 36 that includes measures of fatigue and measures of holistic function like the Narcolepsy Severity Scale for clinical trials that measures the effects on disrupted nighttime sleep among other symptoms. Nighttime symptoms are also measured subjectively with the use of sleep diaries.

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

Now importantly, all objective measurements were associated with subjective improvements of daily function. Ovapraxin was generally well tolerated with a safety profile consistent with past studies. No serious treatment related adverse effects were reported. The most common adverse effects were insomnia, urinary urgency, and frequency. As with the Phase IIb experience, the majority of urinary events and insomnia decreased over time in both severity and frequency.

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

More than ninety five percent of participants who completed the studies enrolled in the long term extension. We believe these data and the high enrollment in the long term extension study are strong indicators of the transformational benefit Ovaparaxin can deliver across the symptoms that impact NT1 patients. And we look forward to sharing multiple oral presentations starting at World Sleep with more to follow at future medical conferences. Takeda will host an investor call on 09/08/2025 from World Sleep in Singapore. Based on these strong Phase three data, we plan to file for U.

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

S. Approval in NT1 later this year with regional filings to occur simultaneously or shortly thereafter. We believe these outstanding Phase III results have the potential to establish Ovaprextin as a new standard of care for patients with NT1. Next slide please. The Phase three results in NT1 are exciting and this is just the beginning.

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

We will continue to gather information in the long term extension to see how patients fare over longer periods of time. As previously reported, sustained effects beyond six months have been observed with many of the patients being treated for more than two years now. We believe the long term extension data from the Phase III and Phase IIb trials will enhance our deep understanding of orexin biology and allow us to optimize treatment for patients in need of this lifetime therapy. Our orexin franchise is making rapid progress beyond Ovaprextin. The next generation orexin-two receptor agonist TAK360 is in Phase II development for narcolepsy type two and idiopathic hypersomnia.

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

These results are expected to read out at the end of this fiscal year or early in fiscal year twenty twenty six. And of course, we continue to work in our laboratories on the discovery and development of additional tailored orexin agonists that have the potential to address vast unmet needs in diseases where orexin plays a role. We expect a new next generation orexin agonist to enter the clinic later this year as we accelerate development of our multi asset orexin pipeline. Next slide please. Pipeline momentum in fiscal year twenty twenty five is off to a great start.

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

We now have outstanding results from two Phase three programs in hand. The Phase III VERIFI study of rusfratide, a first in class synthetic hepcidin mimetic in development to treat polycythemia vera, was presented at the American Society of Clinical Oncology plenary session. The plenary session is where data with the potential to transform medical practice is typically highlighted. The discussant at the plenary session, an ASCO appointed expert emphasized that the study result is practice changing and recommended that rasvirtide should become part of the standard of care for patients. In our GI2 therapeutic area, we initiated a Phase III head to head trial comparing zazocitinib versus dacravacitinib that is designed to clearly differentiate zazocitinib in psoriasis.

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

We also initiated a Phase III trial for elitircep in second line anemia associated myelodysplastic syndrome. This is the beginning of a broad late stage elitircep development program for which we will have more to say in the future. There are several regional approvals this quarter, including European approval of ADCETRIS as part of an additional chemotherapy regimen in frontline Hodgkin lymphoma. Our plasma derived therapies continues to broaden indications and enter new markets. HYQVIA was approved in CIDP and multifocal motor neuropathy in Japan.

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

GammaGuard ERC, a new formulation with low IgA antibodies, was approved for The U. S. And European markets. In addition, HiHUB and HiHUB Duo, two new devices designed to streamline the administration of IQVIA were approved in The U. S.

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

Looking forward to the rest of the fiscal year, and if you could move to the next slide, please, 2025 is indeed a pivotal year for our late stage pipeline. I have already highlighted the next steps for Ovaprextin. For rusvirtide, we are targeting a medical conference in the second half of the fiscal year to share our fifty two week data update that will include durability of response and additional safety. We plan to file an NDA in The U. S.

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

For rusfertide and polycythemia vera in the 2025. And finally, later this year, we will have top line data for zazocitinib in two pivotal Phase III psoriasis trials, LATATE-three thousand and one and 03/2002. Looking further into the future, next slide please, 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. Zazocitinib, our oral allosteric TYK2 inhibitor, continues to add expansion opportunities and will start a Phase II study in hidradenitis suppurativa or HS within the next year. HS is a chronic, recurrent and debilitating inflammatory skin condition.

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

The global prevalence is estimated to be around two percent. There are limited approved treatment options available and people living with HS continue to experience high disease burden. We believe there is a significant need for a durable and effective advanced systemic therapy. Going forward, we will maintain our strong focus on late stage development activities with a continued emphasis where possible on acceleration. These efforts will support our ambition to file up to five additional indications from our late stage programs through fiscal year twenty twenty nine.

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

Thank you very much, and I'll now turn it back to Chris for Q and A.

[Moderator]

And we have Christophe, Milano, Andy and U. S. Business Unit President, Julie Kim as well to answer your questions. If you're participating in the English channel, please ask your question in English. If you're listening in the live audio, you can ask the question in either of the two languages.

[Moderator]

Please keep your questions to maximum of two. Please ask all the questions together. First question, Morgan Stanley, Muraukasan. Please unmute yourself and ask your question. This is Murauka Morgan Stanley.

[Moderator]

Sales of individual products, looking at that Entyvio, IG, Vyvanse, QDenga, they were relatively weak. And I think your message was they're okay. But in the second quarter, for those four products that I just mentioned, do you expect recovery? That's my first question. And the second question is After eight sixty one and three sixty, I think you have another molecule coming into the pipeline.

[Moderator]

So what is the additional benefit? And what kind of clinical advantage can we expect for this new molecule that be added to the pipeline? Thank you. First question was about IG and Entyvio Vyvanse and what was the fourth one? CuDenga. Qudenga. Okay. Thank you. Thank you very much.

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

So the first question about some of the products that were a little bit weaker in Q1. So IG, Entyvio, Vyvanse, QDenga in particular, how are these looking to perform in the rest of the year? Perhaps I'll ask Christophe to begin that answer and then Julie to add detail as required. And then the second question was for any additional data that we can or any additional direction we can provide on the next additional orexin agonist coming through into the pipeline later this year. I'd like to ask Andy to comment on that, please. Thank you.

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

Thank you, Chris. It's very clear that in our mind, first quarter is quite soft and does not reflect the the underlying dynamics of our product. And this is why we have not changed our guidance for the year. We believe that this first quarter does not reflect the the dynamic of the product. So in the case of Ontivio, the pain continues to accelerate.

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

The we are not at full market access yet in The US. So that means that we are losing some prescription and therefore some switch opportunity from IV to sub q. But we are progressing in term of market access and will reach the maximum and the optimal stage during that this year so that we continue to accelerate the payment. The feedback we are getting on the payment is is very strong. Julie can explain further.

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

On Vyvanse, Milano has explained that the q one is extremely impactful in term of growth rate because of a year on year comparison. We also know that eventually there will be we'll reach a plateau. Therefore, that's why we believe that this year is the last year of significant impact of of Vyvanse generic exposure. So you will see a waning impact during the year, especially because there was a very significant generic penetration at the end of last year. The immunoglobulins, there is always some quarter by quarter growth rate change, but we remain committed to the forecast that we gave in in q four, which is mid single digit overall PGT franchise growth, high single digit for IG.

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

So you see we are slightly lower. I mean, remember that when it comes to immunoglobulin, the the demand is greater than supply. So it's all about, you know, allocation and and we have a very competitive portfolio right now with with new indication. And Cuy dung is actually the same. You know, we we the demand is greater than supply.

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

Are ramping up our supply. So it's all about shipment and allocating our doors to where we have greater demand. So we are very much convinced that Kudenga will will continue to grow in the future. And this is why, overall, we believe that we will, you know, deliver our guidance, which is broadly flat in revenue, for example, for for for the year.

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

Maroko san, this is Andy. Maybe I can dial up and provide some context regarding our approach to orexin and our broader orexin franchise. So we think of diseases that could potentially be managed through orexin agonism in three buckets. There's orexin deficiency, which is n t one. There are there are other rare diseases that are characterized by normal orexin levels, like n t one and idiopathic hypersomnia.

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

And then there's a large array of more common diseases that have symptoms like like disruptions in in sleep wake cycles, like other neuropsychiatric symptoms that we believe modulation of the orexin pathway could be beneficial. And it's clear that TAK-eight sixty one is not just a first in class for type one narcolepsy, but a potential best in class and with potentially very little room for additional differentiation. For TAK360, as I've mentioned, we're still learning a lot about TAK360 and we have two ongoing Phase IIb programs in Type II narcolepsy and idiopathic hypersomnia, so rare diseases that are characterized by orexin deficiency. We'll have another molecule coming into the clinic later this year and we continue to build additional molecules that have differentiated pharmacology that we can use to begin to explore benefits in more common disorders. The way I would think about orexin is that with eight sixty one, we're really just scratching the tip of the iceberg.

[Moderator]

Thank you. Pharmacology So the product that is different in pharmacology, is that for more general disease, more common diseases? Is that the correct understanding?

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

That's our intent at this point. I mean, we have to also recognize that there's still an immense amount to learn about this pathway after type one narcolepsy. So we have the the level of experience that we have in type one narcolepsy with these phase three results and with the the the the extension from our phase two b study where we have patients now up to have been on therapy for up to two years is quite extensive. There's still very little known about this pathway outside of type one narcolepsy. Our intent is to is to win and own this pathway with multiple molecules and explore the vast potential of this disease in both rare and common disorders.

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

Thank

[Moderator]

you very much. Thank you. Next question is Yamaguchi san from Citi, please.

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

Can you hear me?

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

Yes, we hear you.

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

Thank

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

you. So this is thank you very much for taking my questions. This is Yamaguchi from Citigroup. I have two questions. The first question regarding the competitive landscape

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

Recently, Alchemist put up top line release on the elections and they seem to be missing catalipsy portion of the data. And you talk about and this I was talking about the catalyst important. So can you you don't need to talk about competition, but can you elaborate how this is important and how this is going to be differentiated from your products and Alkamis products? That's the first question. Second question is more broad questions.

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

Christopher, someone talking about some general investment strategy for The U. S, which does not really contain new things, but it was like $30,000,000,000 in total. And globally speaking, a global major company like your company is trying to put up some investment to The U. S. Market for the future, especially on the manufacturing side.

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

Do you have any kind of a new plan how to accelerate those investment in The U. S? Or can you make any kind of comment on what's the new sort of business model that U. S. Companies, including your companies, are looking for in The U.

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

S. Like DTC, trying to control the cost structure? So that's an open question, the second one. Thank you.

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

Thank you, Yamaguchi san. So the first question on our thoughts on evolving data in the narcolepsy landscape, I'd like to ask Andy to comment on that. And then the second question on investment in The U. S. Or how our business may evolve, given the changing landscape in The U.

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

S. I'd like to ask Christophe to comment on that, please.

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

Thanks, Chris, and thanks for the question, Yamaguchi san. So as I mentioned, we believe that TAK-eight sixty one overprexten is not just first in class, but potentially best in class agent. We've seen benefits across all symptoms using both objective and subjective measures. In many cases, these benefits normalize these patients across all many or some of the symptoms of narcolepsy type one, including cataplexy. So cataplexy is a somewhat variable measurement.

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

We were very pleased to see that our results in cataplexy are quite significant and very meaningful for patients, and we look forward to presenting those data at World Sleep next month. It's hard to comment on the competitive landscape because we haven't seen data. So we'll see data rolling out in sleep. But I think suffice it to say, we really believe with the time advantage that we have and with the data that we'll present next month that Ovapraxin is is a highly competitive agent in in this class.

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

Thank you, Andy and regarding our investment. First, I would like to remind everyone that we are we are highly invested in The US. So for example, if you look at our manufacturing network, the the country where we have the biggest manufacturing presence in term of number of site and number of product we manufacture, number of colleagues that are involved is by far The US. So that's why we are extremely balanced and we will continue to invest in this manufacturing network in in The US. And that's also why we our exposure to tariff is is limited as Milano explained.

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

So we strategically, we continue to to take into consideration many parameters when we decide a new investment. Of course, we are very much aware of geopolitical consideration and also consideration so that will drive our investment decision in the future. But I want to really reinforce the fact that we are extremely invested in the in The US on the manufacturing side. Obviously, also on the r and d side, we do the majority of our research and development activities in in The US. So and that's think is is is important for our long term strategy and strategic situation because we also do majority of our revenue, the biggest part of our revenue in The US.

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

When it comes to the DTC, I will ask Julie to to comment on the direct to consumer model. If, Julie, could you could you could give your perspective about that, that that would be great.

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

Yes. Thank you, Christophe. In terms of the direct to consumer model that you've heard about in the news, this is an opportunity for the pharmaceutical companies to be able to offer their medicines on a platform, cutting out the the middlemen in The US. So this would allow us to go direct as the platform indicates and this would provide lower pricing directly to patients without necessarily impacting the pharmaceutical companies negatively because as you're probably aware, on average across the industry, 50¢ of the dollar goes to other, players in the values in the value chain. So the mark the manufacturers currently receive on average 50¢ on the dollar.

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

So, being able to offer a significant discount on the list price through these platforms does give patients a direct benefit and it's also good from the manufacturer standpoint as well.

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

Julie, can you comment? Still, just to manage expectation, our our our portfolio of product does not is is not an easy one to apply DTC. Can you comment on that?

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

Sure. The the key aspect of the DTC platforms that I I should have mentioned is that this is cash paying for the patients and so this is primarily more retail medicines. The current products like insulin are offered in this type of platform as well as GLP-one, for example. So our portfolio is not necessarily this type of retail medicine, but we will look at opportunities, for products such as Trintellix on this platform.

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

You.

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

You, Yamaguchi san. Moving to the next question then. Next question, I'd like to call on Steven Barker from Jefferies, please.

[Stephen B, Managing Director at Jefferies]

Yes, Steve Barker from Jefferies. Thanks for taking my questions. My first question is related to spending. You are forecasting full year SG and A flat year on year and a small increase in R and D, but both SG and A and R and D were both down substantially in the quarter. So I was wondering if you could comment on that and the outlook for spending.

[Stephen B, Managing Director at Jefferies]

And then the second question is related to orexin. As per the slide, you are looking for the new compound, which is scheduled to enter development this year. You're looking at indications like sleep wake, respiration, metabolism. Sleep wake, I think that's something related with Alzheimer's respiration. Should we be thinking sleep wake is Alzheimer's respiration, sleep apnea perhaps, and then metabolism.

[Stephen B, Managing Director at Jefferies]

Is that something if you could comment on how orexin might affect metabolism and if it could actually be useful in treating obesity? I'd like to comment on that too, please. Thank you.

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

Thank you, Steve, for your question. So the first question on trends of spending Q1 versus the full year outlook, I'd like to ask Milano to comment on that. And the second on the new compounds in orexin, looking at sleep weight disorders, what potential exists in these areas, particularly obesity is an area of interest. I'd like to ask Andy to comment on that, please.

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

Steve, thank you for the question. So let me answer to the about SG and A first. So this is the mostly this decline compared to year on year in the last quarter one is, for SG and A, it's more like FX. If you compare the the constant exchange rate, it should be mostly flat. That's SG and A.

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

So it's in line with our the the the full year, forecast. For r and d, we do we do the the the invest for the pipeline developments. And still, we anticipate the r r and d investment is ramping up. For example, now we start head to head study with NuDucra in in July. Elterocept, also in July, we started the the trial.

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

For March, also, we started the trial in April. So we are ramping up all the activities. But still is a good thing is we also see the the the savings from from the efficiency program we initiated last year. And then we are also keeping the very tight a management of the the headcount, you know, the the cost to both side so that we see also the benefit from the all the savings efforts. So that's how the Q1, the numbers, eventually landed.

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

But eventually, we are still keeping the full year forecast management guidance for both SG and A and R and D.

[Stephen B, Managing Director at Jefferies]

Thank you.

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

Steven, on your question regarding the breadth of potential of Orex and Agnes across indications, I'll go back to the earlier comment that we're really just starting to scratch the surface of the potential of this biology. We know now definitively that agonism of the orexin two receptor and type one narcolepsy can have profound benefits and be administered in a way that's tolerable for patients. So so now we're starting to imagine and develop molecules that have an array of pharmacology that will allow us to explore opportunities in other rare disorders like type two narcolepsy, like idiopathic hypersomnia, and then begin to explore opportunities in other in other disorders that are characterized by either sleep wake cycle disruption because we there's an obvious link there. Respiration, we've already shown and we've published with TAC925, our IV molecule, that there are unique properties of this pathway in respiration. And based on extensive scientific literature and the expression patterns of the orexin receptors in the hypothalamus, we believe that there are potential opportunities in metabolism.

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

I don't want to get too far out ahead of ourselves. Our goal is to develop the array of molecules that will allow us to explore this breadth of indications and to go from there.

[Stephen B, Managing Director at Jefferies]

Understood. Thank you.

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

Thank you, Steve. Okay. Moving on to the next question. I'd like to call on TD Cowen, Michael Niedelkovich. Please go ahead and ask your question.

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

Hi. Thank you for the questions. I have two. My first is on Entyvio. You've noted in the past that transitioning patients from Part B to Part D coverage has been a hurdle to adoption of the pen.

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

Why should we expect that dynamic to fall away in the coming quarters? And on the same topic, a competitor IL twenty three will likely soon offer subcutaneous induction and maintenance. How do you think that might change the competitive landscape, especially considering that the Entyvio pen seems to be helping to ward off competition? So so that's my first question on Entyvio. Then my second question is on zazositinib.

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

In the head to head trial versus ducravacitinib, can you remind us if it's powered for superiority? And in that trial, if zazositinib only shows noninferiority, how would that affect your 3,000,000,000 to $6,000,000,000 peak sales ambition in psoriasis? Thank you.

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

Thank you, Mike. So the first question on ENTYVIO coverage and competition landscape, I'd like to ask Julie to comment on that. And the second question on the head to head, is it powered for superiority? Andy, if you could take that one, please.

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

Hi, Michael. Thank you for the question. When you look at the dynamics in The US around Penn access, you are right. There have been challenges in terms of making the the switch, but we're working through the quality. I'll call it the quality of the access at the local level.

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

Sometimes this is a challenge of of the coverage that's provided at the parent plan not being pulled all the way through to the local plan. Sometimes it's because of that switch from IV to Penn, medical to pharmacy. Sometimes it's a system issue and helping again at the very local level addressing those specific system issues. We're attacking all of these one by one and as we clear through them, we are seeing the the pull through on Penn. So this is why we believe that as we continue to improve the overall coverage level and that quality of the pull through that we'll see the benefit from Penn driving further growth as we're seeing roughly 30% growth quarter over quarter on the Penn.

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

In terms of the second part of your question in regards to sub q induction, that is something that, we are also looking at. And for right now ENTYVIO still has very strong, bionaive starts within UC in particular. And so this is something that as we continue again to pull through on the access, we expect to see further growth for the Penn.

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

And Michael, I'll start on Zazo and then hand it over to Christophe to talk about the competitive dynamics. So we're seeing great progress in our overall Zazo program, as I mentioned, on track to readout our two psoriasis Phase III studies later this year. Our psoriatic arthritis program is going well. Two Phase IIb studies in UC and Crohn's that we'll read out next year, starting now in HS. And then we have an additional indication, perhaps indications that we look forward to starting soon.

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

Your question specifically on the head to head with ducravacitinib, yes, this study is powered for superiority. And, Christoph, I'll hand hand it back to you.

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

Thank you, Andy, and thank you, Mike, Yeah. It's a it's a head to head superiority because we are very confident, obviously, that the product profile will deliver this type of result. It is important because we want to demonstrate that zalucitanib is a new class of oral which change the efficacy efficacy profile of the oral treatment. Overall, today, the oral treatment have around 16% market share, and it has been it has not been growing.

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

And we believe that our compound of the city need perhaps also with another compound of another class in development in a role, you you you know what I'm talking about, will change that. And we believe that that's a promise of this new role is to really change the the importance or the contribution of oral treatment to the treatment of psoriasis. So this head to head is important to really create a new role standard in term of efficacy. But, of course, we will also use the Phase three result. Thank you.

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

Great. Thank you, Mike.

[Moderator]

Moving on to next question. Nomura Securities, Matsubara san. Please ask your question. Yes, this is Matsubara, Nomura Securities. Can you hear me okay?

[Moderator]

Yes, we can hear you. Thank you for the presentation. My first question is related to an earlier comment. First quarter growth, first quarter numbers doesn't necessarily represent the overall growth dynamics. But if you look at the sales in The U.

[Moderator]

S, it looks quite weak. So I want to understand why. That's my first question. And the second question is about TAKHZYRO. Again TAKHZYRO is weak in The United States.

[Moderator]

What is the reason behind this? And also Ionis donitansen is going to be launched very soon. So this is going to be a competition for new patients. So should we have some concern for this product in the future?

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

Thank you, Matsubara san. So the first question on so The U. S. Revenue performance in Q1 and what some of the dynamics there are? And then the second question on TAKHZYRO specifically.

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

So I'd like to ask Julie to comment on those, please.

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

Hi. Thank you, Matsuwarasan, for the question. One of the things that please remember in terms of The U. S. Performance is that you're also seeing reflected in these numbers, the impact of the Medicare Part D redesign across, key products in our portfolio.

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

So so that is part of, the the impact on the growth. In regards to TEKHZYRO in particular, TEKHZYRO continues to, have strong performance in The US. And yes, there are new competitors coming onto the market, but in terms of efficacy, there is really not a significant change in efficacy from those competitor products. When you look at the long term history that we have both in terms of performance and safety and you look at the real world data that we've collected on Takhzyro, since its launch, we are in a very strong position to defend, Takhzyro in

[Moderator]

This is Fujita speaking. I would like to add just one comment. In The United States, Christophe and Julie has already mentioned the product dynamics and also we don't I don't have any additional thing to say about the whole situation, but everything that we've explained so far is US focused, including Vyvanse. Vyvanse impact is the biggest in US and this is why The US numbers and performance looks a little bit softer. As far as TAKHZYRO is concerned, demand continues to be strong, but the channel inventory is now lower, that's another factor behind the weaker performance of TAKHZYRO. Next question is Wakowsa, JPMorgan. Please.

[Seiji Wakao, Senior Analyst at JP Morgan]

JPMorgan. I have a question. Firstly, R and

[Moderator]

D

[Seiji Wakao, Senior Analyst at JP Morgan]

expense. R and d expense represent only 90% provision to other full year guidance, which which seems to be slow. Is this in line with the plan, or how there any suppression for spending? And based on the first first quarter progress, do you foresee any change to year over year r and d expense outlook? With the eight six one over over 4 lakhs 10, basic study now completed, there also does not seems to be a factor that to drive an increase in the in this fiscal year is your first question.

[Seiji Wakao, Senior Analyst at JP Morgan]

And the second question is about MFN. You you briefly mentioned The US policy, but I'd like to know more about more more more most favored nation drug pricing policy. Are you are you currently in discussion with the US government on MFL? And have you received any indication of targeting pricing? That's it.

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

Thank you, Wakao san. So the first question on R and D expense progress towards the full year guidance. Is this in line with plan? Milano can comment on that. And then the second question on discussions around most favored nation.

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

I'd like to ask Julie to comment on that, please.

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

Thank you, Wakao san. So I'm going to comment on the first R and D spend in Q1. So if you compare against last year Q1, there's a multiple effect. Sorry. I think the the to Steve's question previously, I I I explained in a in a as a kind of efficiency program as a whole, but there's a bit of a detailed explanation I can add.

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

So the the comparing to last year, we had some a few, program termination, like Sotiklestat or zero six two. So these program termination create some space for the budget. That's one. The second, a, we had, some pipeline financing arrangement with Blackstone. That also helps, for the r and d savings.

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

And third one is something I mentioned the the the previously, that's the we are, you know, continuing for the FCC program efforts. So we we manage the all the overall the budget, you know, everything is very tight. So that's also creating the savings a space. So if you recall our explanation of the q four, we are making all these savings, and then we will reinvest for those savings for the pipeline development. That's that's gonna happen.

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

So in from July, we are starting the phase three for the l terecept, head to head study with the dukra. So this will ramp up, and then we will increase. We will ramp up all these around the operations. So eventually, all in all, we are in line with the plan.

[Seiji Wakao, Senior Analyst at JP Morgan]

So could you clarify fast quarter performance was in line with your internal plan or below?

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

Yes. We are making savings, but overall, we are in line with the plan.

[Seiji Wakao, Senior Analyst at JP Morgan]

Okay. Thank you.

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

And thank you, Wakao san. In terms of MFN discussions in The US, so there have been numerous different statements about MFN both from the the president as well as others in the administration at a high level. So details have not really been shared yet at this point. We have not been contacted directly in terms of price negotiations at this point. We are gearing up and preparing for the potential negotiation of Entyvio as part of the IRA Medicare price negotiations.

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

Now, MFN in general, there are a basket of countries that are being considered, we think, and we are assessing what the potential impact of that could be depending on a variety of different scenarios for how MFN can be applied. So, we're working on our own mitigation plans for that and we're preparing, as I said, for the price negotiations as part of the IRA Medicare price negotiations. That is a place where the MFN type of approach could be applied, but we're waiting to see further details.

[Seiji Wakao, Senior Analyst at JP Morgan]

Yeah. Thank you.

[Moderator]

Due to time limitations, the next question will be the last question. Which is from Ueda Swan from Goldman Sachs. Please unmute yourself and ask your questions. Yes, this is Ueda, Goldman Sachs. Want to ask a question about the preparation for the launch of Obebov Rextone.

[Moderator]

First in class and best in class potentials were mentioned today. But what about the sales team and what other preparations underway for the launch of Webprextone? And because you're focusing on NT type one, I think diagnostics is very important. Last year in R and D Day, you talked about the use of digital technology potentially. So I want to understand how this technology is being prepared leading up to the launch. Thank you.

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

Thank you for the question, Ueda san. So a question on how we are preparing for the launch of oviporexant, what are the approaches we're taking, including use of digital, etcetera. So I'd like to call upon Julie to answer that question, please.

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

Yes. Thank you for the question, Ueda san. As you can imagine, we are very excited to be preparing for the potential launch of Ovaparixin for narcolepsy type one patients. So we are gearing up in terms of our commercial, structure and organization as well as our medical team which is already out in the field educating, on, Ovaparaxin in narcolepsy type one. In terms of the digital, support for ovaparrexin, we are looking at a number of different, avenues and approaches to support particularly diagnosis in narcolepsy type one.

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

This is an area where we are looking to unlock the bottleneck that exists in terms of diagnosis through sleep centers. So we will share more detail once we're able to do so. But this is quite an exciting opportunity for us and, as I said, we're looking at multiple digital avenues to support diagnosis and the overall patient experience.

[Moderator]

Thank you very much. That's all the questions I have. Thank you. Additional comment from Furuta san. Yes, Mr. Kao. Q1 R and D spend, just wanted to add some comment because there may have been some inaccuracies in what I said earlier. Q1, we had savings and your question was whether this is according to internal plan and I have to say that savings actually was bigger than what we had planned for. But R and D delivery implementation is according to plan. Saving is not impairing delivery of R and D.

[Moderator]

And we are really enjoying the benefit of the efficiency programs in the past, which means that it's possible that savings may be a little bit higher than we plan. Thank you very much. With that, we would like to conclude today's webinar. We would like to thank you all again for being a part of this program despite a very busy schedule and we appreciate your kind continued support.

Participants

Executives

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

Analysts

• Moderator
• Hidemaru Yamaguchi, Managing Director 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