Daiichi Sankyo Company, Limited

Sai, speaking. Thank you very much for joining Daiichi Sankyo's conference call, despite your very busy schedule today.

Now, based on the presentation materials, let me explain our FY2020 Third Quarter Financial Results, we announced at 1:30 p.m. on Friday, January 29, Japan time, Please turn to Page 2.

These are the topics we are going to cover today. I will explain our FY2020 third quarter results and then give you our business update.

Then Wataru Takasaki, R&D Division Head, will give you our R&D update. We will entertain your questions at the end.

Please turn to Page 3. This page is an overview of FY2020 third quarter results.

Revenue was ¥738.8 billion down ¥18.2 billion or 2.4% year-on-year. Cost of sales increased by ¥100 million year-on-year.

SG&A expenses rose by ¥21 billion. R&D expenditure increased by ¥26.7 billion.

As a result, operating profit reached ¥89.5 billion down by ¥66.1 billion, or 42.5% year-on-year. Pretax profit decreased by ¥60.4 billion to ¥99.6 billion.

Profit attributable to owners of the company was ¥75.8 billion down ¥58.5 billion, or 43.5% year-on-year. So for the actual currency rates the U.S.

dollar was ¥106.11, the yen appreciated by ¥2.56 against the dollar. The euro was ¥122.37, the yen depreciated by ¥1.32 against the euro, Please turn to Page 4.

From here on, let me explain positive and negative factors for revenue compared to the previous year. Revenue declined by ¥18.2 billion year-on-year.

I'd like to explain its breakdown by major business unit. First, in our Japan business including domestic sales and marketing, vaccines and healthcare business, sales increased for pain treatment Tarlige, which was launched in April two years ago.

In addition, Memantine AG, Ezetimibe AG etc., launched in June last year, also contributed. So sales rose for Daiichi Sankyo ASCA product.

However, sales of Alzheimer type dementia treatment Memary, anti-influenza treatment Inavir, direct oral anticoagulant Lixiana, and vaccine business revenue decreased. Daiichi Sankyo Healthcare product sales also declined, so revenue decreased by ¥39.6 billion for Japan business as a whole.

Next, let me explain our overseas business. Forex impact is excluded here.

Regarding Daiichi Sankyo, Inc., in the United States, sales of hypercholesterolemia and type 2 diabetes treatment, Welchol, decreased. But revenue rose by ¥12.4 billion, thanks to the contribution of anti-cancer agent Enhertu launched in January last year.

Revenue for American Regent in the United States decreased by ¥6.5 billion as sales of Injectafer for iron deficiency anemia decreased due to the impact of COVID-19 etc. Revenue for Daiichi Sankyo Europe increased by ¥14.3 billion due to an increase in Lixiana sales and the booking of gain on sales from transferring long listed product in June last year.

As for the upfront payment and regulatory milestone, in our strategic collaboration with AstraZeneca for Enhertu and DS-1062 or the Datopotamab deruxtecan, Dato-DXd in short, revenue increased by ¥2.5 billion due to the revenue recognition of the Datopotamab deruxtecan upfront payment for the third quarter year-to-date. Forex impact reduced our revenue by a total of ¥5.9 billion.

Page 5 shows positive and negative factors for operating profit. Let me explain the profit decrease of ¥66.1 billion by item.

As explained earlier, revenue declined by ¥18.2 billion, including the decrease of ¥5.9 billion due to forex impact. Next, I will explain cost of sales and expense items by excluding forex impact and special items.

Cost of sales was down by ¥12.8 billion due to the cost decrease associated with revenue decrease, and also due to the improvement in the cost ratio by changes in the product mix. SG&A costs were affected by cost decrease due to the spread of COVID-19.

That increased by ¥12.5 billion due to cost increase in Enhertu-related expenses. And the expenditure rose by ¥28.5 billion because of an increase in R&D investments for the three ADCs and cost increase due to oncology development structure enhancements.

Cost decreased by ¥4.6 billion in total due to forex impact. Special items had an impact to increase our costs by ¥24.3 billion compared to the previous year.

I'll explain the breakdown of special items later. Profit decreased by ¥40.4 billion, excluding forex impact on special items.

Please look at Slide 6. This is showing the breakdown of the special items.

In the first half of the year, ¥1.3 billion of the restructuring costs in the supply chain and the ¥3.8 billion of the impairment loss were added up in addition to the gains of ¥18.8 billion on sales of the subsidiary and ¥10.6 billion on sales of the fixed assets, resulting in the cost reduction impact of ¥24.3 billion in total. Since there was no special item in this fiscal year, the cost was increased by ¥24.3 billion year-on-year.

Next, I'm going to explain the changes with profits this fiscal year, on Slide 7. The operating profit, as I explained previously, was affected by the forex and the special items, and it was increased by ¥66.1 billion.

As for the financial income and expenses, etc., ¥4.8 billion of the financial income was recognized due to a decrease in the contingent consideration when quizartinib was acquired, resulting in the profit increased by ¥5.7 billion. Although the profit before tax decreased, the income taxes etc., decreased by only ¥1.9 billion due to the lower tax rate in the same period of the previous year, brought by the introduction of the consolidated tax payment system, etc.

As a result, the profit attributable to the parent company this year was ¥75.8 billion, which was a decrease of ¥58.5 billion year-on-year. Slides 8 and 9, show the revenue increase and decrease in the major business units in the major products in Japan.

I explained the status of each unit excluding the forex impact in the previous Slide 4. These slides show the results that include the forex impact.

By the way, there are no revisions to the October announcement of the consolidated forecast for FY2020. We also expect the impact of the COVID-19 expansion to our results to be approximately the same as what we presented in October.

I'd like to go over our business updates in the next slides. Please look at Slide 11.

On Slide 11, I will discuss our initiatives to maximize the value of Enhertu. The year-to-date sales of Enhertu in the U.S.

and Japan during Q3 of FY2020 resulted in ¥20.7 billion. The Enhertu markets and the indications have been steadily expanding since the launch in the United States last January.

For breast cancer, following the United States and Japan, we received a regulatory approval on January 1 for the indication of the third line treatment for HER2 positive breast cancer in the EU. We received an approval in the EU seven months after the application was accepted under the rapid review last year.

Enhertu is the first product in the last 20 years to be approved for the breast cancer indications in the EU based on the results of a single armed Phase 2 trial. Furthermore, for gastric cancer, we have obtained indications in the United States following Japan.

By undergoing the priority review in the U.S., the application was approved three months after it was accepted in October last year. This was an extremely rare case of approval in the U.S.

based on the results of the clinical trials in Asians only. Furthermore, based on the results of the clinical trials of the third line treatment for HER2 positive gastric cancer, we obtain the indications for the second line treatment.

These positive results give us an increased confidence on Enhertu's product profile. It is our hope to deliver Enhertu to as many cancer patients as possible and maximize the product value in the future.

Slide 12 describes the breakdown of Enhertu's revenue. In the year-to-date results for the third quarter of FY2020, Enhertu's revenue which includes their product sales of ¥20.7 billion plus the upfront payment at the time of contract and the regulatory milestones totaled ¥28.8 billion.

The forecast for the FY2020 results is expected to be ¥48.3 billion. Of this amount, the regulatory milestone revenue is ¥3.7 billion.

The earnings forecast announced in October presuppose the acquisition of the indication for the third line treatment for HER2 positive gastric cancer in the U.S. But since the indication for the second line treatment was obtained, the estimated total of the regulatory milestone revenue in FY2020 increased by ¥1.2 billion from what was announced in October.

Slide 13 describes the initiatives for our business growth in each region. These initiatives to strengthen the product portfolio and maximize the product value are progressing steadily.

In Japan, we signed a sales partnership agreement with Eli Lilly, Japan for domestic first-in-class migraine attack suppressor EMGALITY. We also received approval for YESCARTA which is a CAR T-cell therapy licensed-in from Kite Pharma in the United States for the treatment of large B-cell lymphoma.

Additionally, the indications of the anti-epileptic drug VIMPAT, which is one of our main products in Japan, have been extended and a new indication of the combination therapy for tonic-clonic seizures have been added. In Europe, NILEMDO and NUSTENDI were launched in Germany in November last year.

Additionally, in Asia and Latin America, in ASCA, the anticoagulant LIXIANA, which was launched in China last August, was listed on the National Medical Insurance List in December. Slide 14 introduces NILEMDO and NUSTENDI launched in Germany.

NILEMDO, a treatment for hypercholesterolaemia licensed-in from Esperion is a single agent of bempedoic acid, and is a first-in-class oral ACL inhibitor. On the other hand, NUSTENDI is a combination drug of bempedoic acid and ezetimibe, both of which provide a new treatment method to lower cholesterol by combining with existing drugs such as statins.

We will improve the regional value of Europe through the synergetic effect with the anticoagulant Lixiana. The next part of the presentation will be about an R&D update.

Takasaki, the General Manager of R&D will take over from here.

Takasaki speaking. Today, I'd like to give you our R&D update.

Page16 shows the contents I will cover today. As you can see, all the three ADCs now have a generic name.

But today in my presentation, I will use ENHERTU or T-DXd for DS-8201, Dato-DXd for DS-1062 and HER3-DXd for U3-1402. This time, the presentation at the World Conference on Lung Cancer and the announcement of the financial results were made on the same day.

So assuming that you may not have had a chance to see the contents of the WCLC presentations, we decided to include most of the presentation slides in this material. Please allow me to skip explaining the details of these slides as we are hoping to use our Q&A session later to answer your questions.

Thank you for your understanding. Starting from Page17, I'd like to share the interim data of the HER2 positive cohort in ENHERTU DESTINY-Lung01 Study presented at WCLC Meeting today.

Page17 describes the study design. Page18 shows patient background.

Page 19 is a summary of efficacy results. The overall confirmed ORR was 24.5%.

Page 20 is a waterfall plot showing the percentage change in tumor size. Efficacy was confirmed in IHC3+ and IHC2+ cohorts.

Page 21 is a spider plot showing change in tumor size over time. Durable responses were observed.

Page 22 shows PFS and OS data. Median follow up was 6.1 months.

Median PFS was 5.4 months and median OS was 11.3 months. Page 23 is an overview of safety.

Safety profile was generally consistent with other study results. Page 24 includes ILD-related information.

The incidence of ILD is slightly higher than other studies but we believe this is due to early detection with careful monitoring. We found that the three patients with fatal events had a lung related medical history.

Factors behind the ILD onset are not clear yet as of now, but we will continue to monitor carefully. Page 25 is a summary of DESTINY-Lung01 study.

We believe that the efficacy and safety results we obtained this time will support our future development in HER2 positive NSCLC. The final analysis results from the study will be obtained in the first half of FY2021.

We will announce the future development plan in the future, separately. From Page 26, I'd like to share the interim data of the lung cancer cohort in DS-1062 or Dato-DXd Phase 1 study, which we presented at WCLC Meeting on Friday, January 29.

Page 26 is the study design. Page 27 shows patient background.

About 80% of the patients were previously treated with immunotherapy. Page 28 shows treatment status.

Patients receiving 8 mg/kg discontinued the treatment due to a higher frequency AEs compared to those receiving 4 mg/kg or 6 mg/kg. Page 29 is an overview of safety.

Safety profile was generally consistent with past results confirmed to date, such as the frequency of TEAE and serious TEAE and treatment related events. PAGE 30 explains safety in detail.

The ILD incidence was higher with 8 mg/kg but as is described in the third bullet on the right, the onset in one patient each with 4 mg/kg and 6 mg/kg. Page 31 shows PK profile, systemic exposure or payload was low, and we were able to confirm the stability of Dato-DXd in blood.

Page 32 shows efficacy data. Similar response and durability were confirmed among 4 mg/kg and 6 mg/kg and 8 mg/kg.

Slide 33 is a summary of the Dato-DXd Phase 1 study of lung cancer. From these interim data, it was found that the tolerability of 4 mg/kg and 6 mg/kg was higher than that of 8 mg/kg.

On the other hand, regarding the efficacy, almost the same data were found at 4 mg/kg, 6 mg/kg and 8 mg/kg. Therefore, we selected 6 mg/kg as the recommended dose for the future Phase 3 study.

From Slide 34, I will introduce the data on the biology of HER3 obtained from the Phase 1 lung cancer study of U31402-A and HER3-DXd presented at the WCLC today. Slide 34 shows the percentage of each genomic alteration observed in tumor tissues prior to the HER3-DXd treatment.

It was found that patients with various genetic mutations expressed after the administration of an EGFR TKI have been enrolled in the study. Slide 35 is a waterfall plot that I showed you before.

The anti-tumor activity of HER3-DXd was seen in the NSCLC patients with various genomic alterations. Slide 36 depicts the HER3 expression in the NSCLC patients.

Patients were not selected by HER3 in this study. However, we could confirm the HER3 expression in almost all the patients.

Slide 37 shows the relationship between the HER3 expression and the efficacy. It demonstrates that there was a trend of an association between the clinical response and a HER3 expression.

However, the enrollment is small and we will take this concern to our future discussions. This is all for the three ADC update.

The Slides from 38 discuss updates on Alpha. Slide 39 is about DS-6000 which was also briefly introduced on the R&D Day.

The DS-6000 is the sixth ADC using our DXd ADC technology. It targets cadherin 6 and the drug antibody ratio is eight.

The details of the function of cadherin 6 are still unknown, but it is thought to be involved in cancer metastasis and others. The figure below shows the expression status of cadherin 6 in various cancer types.

It is known to be highly expressed in renal cell carcinoma and ovarian cancer. Slide 40 provides an overview of renal cell and ovarian cancers, their standard treatments, estimated patient population and the Phase 1 study design.

This study is scheduled to begin shortly. Slide 41 is about the cancer treatment virus DS-1647.

It was submitted for an approval in December 2020. This submission was based on the results of the investigator initiated study conducted by Dr.

Todo of the Institute of Medical Science, the University of Tokyo. Since it is a SAKIGAKE designated product, we expect the approval to be in the first half of 2021.

Slide 42 is about Efient. We submitted for partial change approval in the brain area in December 2020.

Efient was unable to verify non-inferiority to clopidogrel in the previous validation study. After that, a new Phase 3 study was conducted in patients with atherothrombotic cerebral infarction and lacunar infarction.

And since the primary end was achieved in this study, this NDA was submitted along with the previous study results. We anticipate an approval during the third quarter of FY2021.

The Appendix summarizes the overview of the two studies we conducted in the past and one current study. Slide 43 is about DS-5141.

We obtained the top line results from Phase 1 and Phase 2 studies on Duchenne Muscular Dystrophy in December 2020 and it was announced in our press release. There were no safety concerns identified with this product.

Regarding the efficacy, the production of the messenger RNA obtained by Exon 45 skipping was confirmed in all patients and an obvious increase in the dystrophin protein could be confirmed in multiple patients. We will continue to conduct detailed analysis, we will discuss with the regulatory authority about the future submission.

Slide 44 is about Tarlige. In December 2020, we obtained the top line results of the Phase 3 study of central neuropathic pain.

As we have already announced in the press release, no additional safety concerns were observed with this product either. In terms of the efficacy, the changes in average pain scores from the baseline to week 14 were superior to the placebo arm.

We are aiming to apply for an approval in the first quarter of fiscal year 2021. That's all for the Alpha updates.

Slide 46 shows the news flow for the next six months or so. Please check back later.

The slides from 47 are an appendix we have posted a list of milestones and a list of pipelines. So take a look at them as well later.

That's all for my presentation. From here, we are going to answer your questions.

Hashiguchi from Daiwa Securities, thank you. I have two questions.

First about Dato-DXd's efficacy, median PFS was 8.2 months with 6 mg/kg, which I think is a great result. Still, there seems to be a big gap between patients with good response and those without much response.

How much progress have you made by now in searching for a biomarker to enable the selection of patients who are likely to respond with efficacy? I believe you're looking at TROP2 expression in the study.

Are you beginning to see some signs of correlations between the TROP2 expression level and the efficacy?

We have not yet completed the analysis of the relationship between TROP2 expression and efficacy in detail. We are working on it right now.

There is a possibility that we may be able to say something about the variability and efficacy based on the relationship with such biomarkers. But we are still analyzing including that issue, when data becomes available, we'd like to share.

Thank you. Secondly, I'd like to ask how you see the results for the DS-5141?

I think you commented a few times before that you have high expectations on this ENA nucleic acid as the next platform after DXd ADC. In response to the top line results, do you have higher or lower expectations or no change in your expectations?

Or do you think you are not sure unless you analyze more details, how do you feel right now?

Keeping activity is clearly observed already. The results show an increase in protein expression in some patients.

In this field, we are now looking at an increase in the expression of dystrophin protein, and the relationship with functions such as a six-minute walk test. Historical data also in patients, the disease progresses with their age.

We are now studying how the drug administration could affect patients with progression as well. We will discuss the results with our KOLs and consult with regulatory authorities to measure its value.

That's all from me. Thank you very much.

Sakai from Credit Suisse. I also want to ask questions about Dato-DXd.

I feel more comfortable with the name DS-1062. During the R&D Day Meeting in December, it was suggested that you're not sure about 8 mg/kg dose.

And this time, based on the data, you decided to select the 6 mg/kg dose. By dropping 8 mg/kg dose, is there going to be any change in the development policy, including your collaboration with AstraZeneca in the future?

Is there anything you can share with us as of now?

Initially, we didn't have many patients to be administered with 4 mg/kg and 6 mg/kg, but we added more patients for the 4 mg/kg and 6 mg/kg doses. In that sense, the follow up period for patient's dose with 4 mg/kg and 6 mg/kg is not sufficient yet, but based on the currently available data, we have judged that the 4 mg/kg, 6 mg/kg and 8 mg/kg doses will bring about similar efficacy.

Therefore we think it's reasonable to select 6 mg/kg instead of 8 mg/kg based on safety profile. By selecting 6 mg/kg, there are some advantages in terms of the supply of investigational medicinal product.

We believe we can accelerate this study and other trials by choosing 6 mg/kg. Regarding these issues, we are having sufficient discussions with AstraZeneca, as we proceed.

That's all from me.

Understood, 8 mg/kg was dropped, but it's just a matter of the dose reduction?

Yes, that's right.

Understood. Thank you.

One more question. Sorry, I don't have paper documents at hand but on the table about upfront payment for Enhertu, Mr.

Sai mentioned that for gastric cancer in the United States, you were originally expecting approval for the third line settings. But as you obtained approval for the second line settings, revenue increased by ¥1.2 billion, I may be speculating but are you suggesting that you were expecting this much money also with future line extensions?

It's not being disclosed, depending on the indications, the amount could vary, because more so we cannot generalize.

Then this time, it was somewhat a surprise to you. Revenue rose by ¥1.2 billion because of the approval of the second line usage, not the third line, correct?

Yes. We didn't expect the approval for the second line settings, second line rate.

Approval was given for the second line settings unexpectedly so our revenue increased by ¥1.2 billion.

Understood, thank you very much.

Muraoka from Morgan Stanley, thank you for your time.

Thank you.

I want to confirm sales of Enhertu. I have the impression that sales in the United States are not enough, $64 million in three months.

If you don't achieve $99 million in the last three months, you cannot achieve your full year forecast. Do you think you can achieve this?

If it's going to be below your forecast, is it because of COVID-19 or because of the [indiscernible]? Please explain the background?

As for Japan, you have sales of ¥1.7 billion in the third quarter. Is this great performance due to the approval for gastric cancer?

Is my understanding correct?

We believe we are on track with the plan in the United States, at the moment. So we are not considering any impact in particular.

In Japan, there is a clear impact from the gastric cancer approval. So we think your assessment is correct.

Let me reconfirm, you must achieve sales of $99 million in the United States by the end of the current fiscal year. Do you think you have a good outlook to achieve this number?

And that's why you're not changing your full year forecast figures this time, correct?

Yes. As of now, we don't see any elements of concern, in particular, this is how much we'd like to achieve.

Thank you. I also want to ask a question about the additional indication of central neuropathic pain for Tarlige.

Is there a direct marketability here? Will this increase the strong momentum of Tarlige further?

Or should we think it's not going to be a big addition?

We should say that the size of this additional indication is around 10% of the total for Tarlige. So there's going to be that much upside.

Thank you. One last question regarding your midterm business plan, I want to confirm that the timing of the announcement is going to be before the financial results in April.

And this is going to be a five-year plan. In addition, this is a question more about the contents.

Your cash is going to increase a lot in the future. Are you going to explain your thoughts on how to spend your cash including RoE?

The timing of the announcement will be March or April. We have not decided exactly when.

But we will make the announcement during that period. As for the content, we are considering the inclusion of what you said you want to see.

Understood. That's all from me.

Thank you very much.

This is Yamaguchi from Citi. Can you hear me?

Hello, thank you. My first question relates to their progress up to Q3.

I understand that you have a unique way of utilizing Q4 and you have a prior investment. Naturally this progress until Q3 seemingly looks good.

And you didn't change your figures. Now when you compare the progress in Q3 against the fiscal year forecast, what is your observation on the sales and the costs?

Can you speak about it first?

Yes, it's pretty much on track, including the COVID-19 impact. So my understanding is that at this point, there are no changes to our previous announcement on what we look like this time and what we look like this fiscal year.

That means, although the closing figures look nice in appearance that is all within your expectation?

Yes, we believe they are within our expectation.

Understood. Thank you.

Also for Dato-DXd about 4 mg/kg and 6 mg/kg, you enroll up to 50 and 50 and will update it again. The one with 6 mg/kg particularly would have a sharp decrease, it seems that there will be some patients who might decrease even more going forward, are you going to have another update next time?

This is Takasaki. Your understanding is correct.

Thank you. The next time is ASCO or is it a little further?

We are working to target about the time of ASCO.

Thank you.

Maybe you can't calculate it just yet. But the current announcement says that the PFS is much longer than that of existing products.

Are you still not able to calculate the DLR at this stage?

Correct. The follow ups are still continuing and we haven't calculated yet.

You haven't calculated, understood. About DS-5670, there aren't any specific changes to the disclosure but I believe that world thinks that the efficacy of the messenger RNA has been fully confirmed.

You haven't changed your plan of starting the manufacturing and the clinical trials within this fiscal year. Please tell us if your plan hasn't changed and specifically when you will start the trials?

Right, there is no change to the start of Phase 1 in March. We are currently working on that target.

Manufacturing is okay as well?

We have no problem with the clinical trials. But we haven't decided as to the scale of manufacturing and the number of patients to be covered eventually.

They are still to be determined; the clinical trials are fine.

Understood. Thank you.

That's all.

I am Ueda from Goldman Sachs Securities. I'd like to first ask about DS-5141.

Since this protein expression is not observed in all patients, I think it will be hard to expect the motor function improvement unless the protein increases. Even if it doesn't work for everyone, since there's not any existing drug out there anyways, do you believe that this drug is useful enough to be approved?

Is that your rationale for approval? Also, what kind of patients is that drug the most effective for?

I appreciate if you can share your knowledge with us.

Yes, thank you for your question. As for the approval, we need to look at the increase of the protein expression and the functional improvement for a potential approval just by conducting the Phase 1 and Phase 2 studies.

As I mentioned earlier, we are also informed that the prior drug has been required to conduct Phase 3. We will discuss with the authority about such necessity as well.

Sorry, in that case, I believe the current status is that we are not seeing the protein increase in all patients. Nevertheless, if you can confirm that the patients with an increased amount of protein can show good improvement of the motor function, would you be preparing for the submission for approval?

Since the lesion site varies from one patient to another, we need to discuss about the correlations. We have a small number of patients and there is still a big hurdle for us to be definitive, but we are currently undergoing with the analysis.

And whether or not the drug is worth being delivered to the patients? As I mentioned earlier, we will need to determine by discussing with the KOLs and the regulatory authority.

Understood, I'm sorry, but I have an additional question. Are you getting any idea of the type of patients who would have an increased amount of the protein?

That is still under discussion, we are not able to explain the detail just yet.

Understood. Thank you.

My second question is about DS-1647. This uses an oncolytic virus and I suppose Amgen's product is potentially expanding the indications to melanoma, head and neck cancer and other cancer types.

So what is your development strategy? Please explain your future development strategies include the concomitant use with an immune-oncology product?

Yes, we'd like to deliver the product to the brain tumor patients in Japan first. After that, we are planning to organize the manufacturing status for global deliveries.

As you mentioned, we might expand to other solid cancers as well. But we haven't boiled down the discussion to that extent yet.

Understood. That's all, thank you.

I'm Wakao from JP Morgan. Hello?

I have two things. One is, I want you to explain more in detail about the status of Enhertu in the United States from October to December last year?

The sales by quarter didn't seem to have increased that much. Please tell us the reason why the growth was affected, for example, was that due to the impact of COVID-19 or any competitor's products, etc.?

This is our current view. But we regard this as being on track.

We are not quite aware of any, of the major factors you mentioned. We'd like to see the status a little more.

Okay, so the status hasn't changed that much. My second question is about DS-1062.

I guess it's Dato. I think the first person asked about the biomarkers, responders and non-responders.

As for this drug, there are responders and non-responders, and do you think the strategy to narrow down the patience to non-responders will maximize the value of this product? On the R&D Day, I thought you mentioned that you were able to find a patient group for which this drug would work.

However, you mentioned in your presentation today that such patient group is hard to find. Now I don't understand it, and it's getting a little confusing.

Can you explain your current thought?

What we commented as being considered on the R&D Day is still being considered today. We are moving forward with the current strategy to conduct Phase 3 with all comers [ph].

We will of course thoroughly measure the TROP2 expression. Since we can analyze the data retrospectively, after we accumulate a variety of data, if we find out that the population selection is more beneficial to the patients, we will switch our gear.

At this time, however, we'd like to do it on an all-comer basis so that we can offer the drug that works for as many patients as possible.

Understood. Then at this time, have you identified any trend of efficacy by using these data and by analyzing the stratified patients?

That is also currently under discussion. I appreciate your understanding.

Sure. I have one last question.

If possible, can you comment on your partner AstraZeneca's assessment on the results?

We always have active discussions, and I believe they also think that this is very promising.

Thank you. That's all.

I'm Steven from CLSA Securities. I'll be asking questions on behalf of Ren.

The first question is about the decrease of the revenue in Japan. What's the percentage of the impact brought by the drug price revision will the impact of the drug price revision continue throughout the year?

Yes, we expect the impact of the drug price revision in the third quarter to be approximately ¥40 billion. That's all.

Will that impact throughout the year?

We currently anticipate the impact of ¥40 billion. We are not quite aware of anything larger than that.

Thank you. The next is about the diagnostic method of HER2 positive lung cancer on Page 18.

Is it the same as the one for the previous breast cancer?

Yes, I believe it's about the detection of HER2 positive and we apply the same method. However, there are some differences in the characteristics of the measurement methods by cancer type, even though we are measuring the same HER2.

To answer your question, we offer a diagnosis appropriate for each cancer type.

Thank you. My last question is about DESTINY-Lung01 on Page 23, and Page 24.

Are you concerned of 14.3% of the patient mortality? Can you comment on that?

I understand your question is about 14.3% of grade 5 on the bottom of the right column on Page 23.

Correct? Yes.

I think it is rather on the high side. But we are not trying to nail down the underlying cause right now.

We are rather trying to increase the number of trials monitoring them carefully and trying to figure out if this is a constant figure. We don't see these data as indicating a higher trend of ILD specifically with DS-8201 for lung.

That's all, thank you.

So the time's up, and we conclude the Q&A session. Thank you so much for your attendance today.