Eisai Co., Ltd.

Hello, everyone. Thank you very much for your participation today.

I am Oyama, and I assumed the role of CFO and CIRO this January. Now let me begin with the highlights of the third quarter of fiscal year 2025.

Please turn to Slide 2. Revenue for the third quarter of fiscal year 2025 reached JPY 619.9 billion, a 3.1% increase year-on-year, driven by steady growth in our organic pharmaceutical business.

Operating profit was JPY 54.5 billion. While this represents a decrease compared to the same period last year due to the decline of temporary profit from product out-licensing this fiscal year, the contribution to operating profit from our organic business has significantly expanded this year, showing a steady progress.

Next, regarding our pipeline. As already announced in the news release and as we will detail this later, we invested in 2 in-licensing deals that will help maintain and leverage our oncology franchise.

We are progressing steadily toward achieving our full year forecast of JPY 790 billion in revenue and JPY 54.5 billion in operating profit for fiscal year 2025. Next, I will explain the details of our consolidated results for the third quarter of FY 2025.

Driven primarily by strong growth in our core products referred to as 3L's, the anticancer drug Lenvima, the insomnia treatment, DAYVIGO and the Alzheimer's disease treatment, lecanemab, which resulted in a 7% year-on-year increase of our organic pharmaceutical business, revenue reached JPY 619.9 billion, up 3.1% year-on-year. This represents the record high third quarter revenue, and we consider it highly significant that this growth was achieved almost entirely through organic business expansion.

Cost of sales was JPY 139.2 billion, with the cost of sales ratio at 22.5%, slightly higher than the same period last year, but they have been controlled within our plan. The increase was due to factors, including the decline of onetime gains recognized in the prior fiscal year from product out-licensing, which were not associated with significant cost of sales, the impact of drug price revisions in Japan this fiscal year and the changes in the product mix, such as the decline in sales of HALAVEN, which has a relatively low cost ratio.

As a result, gross profit was JPY 480.7 billion, up 1.6% year-on-year. R&D expenses were JPY 114.4 billion, a decrease of 8.5% compared to the same period last year.

The R&D expense to revenue ratio was 18.5%, down 2.3 percentage points from the previous year's 20.8%. This decrease was due to the peaking out in trial costs for LEQEMBI, combined with cost optimization from structural reforms implemented in the U.S.

last fiscal year, such as workforce reductions. SG&A expenses increased by 4.7% year-on-year to JPY 315.7 billion, reflecting proactive investment of resources to LEQEMBI.

As a result, OP was JPY 54.5 billion, and the profit for the period was JPY 41.8 billion. While both figures decreased year-on-year due to the absence of onetime P&L items, the profit contribution from organic business continues to expand steadily.

Regarding the full year forecast, while progress has been steady through the third quarter, we plan to actively allocate resources in the fourth quarter to next-generation key pipeline programs such as the anti-Tau antibody, etalanetug and the narcolepsy treatment, E2086. Additionally, we anticipate recording structural reform costs in EMEA.

On the revenue side, however, due to uncertainties regarding onetime revenues from partnership and out-licensing, we are maintaining our forecast of JPY 790 billion in revenue and JPY 54.5 billion in operating profit. This slide shows the factors driving the change in revenue from last year.

The key point, as indicated by the light blue box, the second from the left, is that the Pharmaceutical business saw significant revenue growth driven by the JPY 49.5 billion increase from what we call the 3Ls: Lenvima, DAYVIGO and LEQEMBI, which offset the JPY 8.4 billion revenue decline due to factors like HALAVEN reaching LOE. Meanwhile, in other businesses, which include sales from nondrug discovery subsidiaries, primarily due to the absence of upfront payment for divestiture of rights for Pariet in China, which occurred in the previous fiscal year, revenue decreased by JPY 22.3 billion.

As a result, revenue increased by JPY 18.8 billion year-on-year to JPY 619.9 billion. This slide provides the factors contributing to the change in operating profit.

The second item from the left, the contribution of gross profit of JPY 7.8 billion reflects strong growth in 3Ls, which offset impacts such as a decrease in temporary profit from out-licensing and lower sales of HALAVEN. R&D expenses and SG&A expenses were explained earlier.

Expenses related to LEQEMBI have largely shifted from R&D expenses to SG&A expenses. The JPY 5.1 billion decrease in other income and expenses includes the absence of temporary profit following the end of global strategic collaboration with BMS for MORAb-202, which was recorded in the previous fiscal year.

The key point here is that while last year's operating profit included significant onetime gains, including out-licensing income, this year's operating profit is almost entirely comprised of profits derived from organic business. Although detailed figures have not been disclosed, the operating profit contributing -- contribution from organic business has grown significantly, approximately doubling compared to the same period last year.

This slide introduces the 2 in-licensing deals in oncology pipeline announced recently. As a foundation for maintaining and expanding our oncology franchise, the first is the acquisition of exclusive development, registration and commercialization rights for Taletrectinib in Europe, the Middle East, Canada, Asia and Oceania from Nuviation Bio in the U.S.

The second is the acquisition of exclusive commercialization rights for Serplulimab in Japan from Henlius Biotech in China. Taletrectinib is a next-generation oral tyrosine kinase inhibitor for the treatment of ROS1-positive non-small cell lung cancer.

This compound demonstrated very favorable efficacy and safety in a Phase II trial showed efficacy for brain metastases where unmet needs are high and received full approval in the United States. It has also already been approved in China and Japan in addition to the U.S., and we will now lead the submission for approval in Europe.

The upfront payment is EUR 50 million with regulatory and commercial milestones totaling up to EUR 145 million. The marketing authorization application in Europe is expected to be filed by the end of the first half of 2026.

Serplulimab is an anti-PD-1 antibody already approved in over 40 markets, including China, Europe, Asia and South America for the treatment of extensive stage small cell lung cancer or ESSCLC. It is the world's first anti-PD-1 antibody approved for small cell lung cancer.

It is currently under development in Japan for ESSCLC and metastatic colorectal cancer with development planned for perioperative gastric cancer. Henlius will continue to lead development for these 3 cancer types.

The upfront payment is USD 75 million with regulatory and commercialization milestones totaling up to USD 313 million. The first regulatory submission in Japan is planned for extensive stage small cell lung cancer within fiscal year 2026, followed by submissions for colorectal cancer and perioperative gastric cancer in or after fiscal year 2027.

These compounds will maximize the oncology business platform we have built with HALAVEN and Lenvima while also serving as a foundation to enter the new area of lung cancer. Strengthening our oncology pipeline is a top management priority, and we plan to continue making strategic investments proactively.

While there is no change anticipated in our consolidated full year forecast for the current fiscal year due to these 2 in-licensing deals, we expect their revenue contribution starting in fiscal 2028. This concludes my part.

Next, COO, Keisuke Naito, will provide updates on our business and pipeline.

Yes. Good evening, everyone.

From now on, I Naito will update on our business and pipeline. As Mr.

Oyama mentioned, our Pharmaceutical business achieved strong growth through the third quarter. I will first explain the sales performance of our 3 main products or so-called 3Ls, Lenvima, DAYVIGO and LEQEMBI, which supported this growth.

Next, I will discuss our largest growth driver, LEQEMBI, covering initiatives aimed at maximizing its value, pathway optimization from diagnosis, treatment and long-term follow-up, the global expansion of the subcutaneous formulation with anti auto-injector, positive changes in the environment surrounding blood-based biomarkers and the progress made in various countries. And finally, I will provide an update on our pipeline and key events going forward.

First, Lenvima, the foundation of our business. Lenvima is an in-house developed orally administered anticancer drug approved for 7 indications across 5 cancer types.

In each indication has been expanded with monotherapy or combination therapies with KEYTRUDA and et cetera. Now over 10 years since its launch, it has contributed to over 580,000 patients in 81 countries and territories.

Its clinical value in indications, including its key indication, renal cell carcinoma remained solid. Third quarter revenue was JPY 258.1 billion, up 4% year-on-year.

All regions showed year-over-year growth or maintained sales. By region, Americas continued to lead with JPY 178.6 billion.

In the U.S. while the Inflation Reduction Act or IRA impacted sales revenue, strong demand absorbed this impact, resulting in a 2 plus -- 2% increase year-on-year.

Retaining top market share in indications such as renal cell carcinoma and endometrial carcinoma, it continues to maintain strong cash generation ability as a core portfolio asset. We remain focused on achieving our full year plan securely.

Meanwhile, Lenvima was included in the selection of drugs for the third cycle Medicare Drug Price Negotiation Program published last month in the U.S. Negotiation with the U.S.

authorities will start, and we anticipate the price revision based on these negotiations will take effect approximately 2 years later in January 2028. Furthermore, based on the favorable court decision and settlement agreements regarding the high-purity patent, we believe generic versions of Lenvima will not be launched until July 1, 2030, unless certain defined contingencies occur.

Next is DAYVIGO, an insomnia treatment. We have our in-house orexin drug discovery platform, which is involved in regulation of sleep and wakefulness.

DAYVIGO is an orexin receptor antagonist developed from this platform. Global revenue through the third quarter reached JPY 47.7 billion, showing robust growth of 18% year-on-year.

It has also received approval in as many as 27 countries and territories. By region, Japan recorded JPY 35.2 billion, absorbing the impact of 14% drug price reduction and achieving 4% year-on-year growth.

It holds a top market share of approximately 60% by sales in insomnia treatment market, further solidifying its leading position. The Americas region recorded JPY 7.1 billion, mainly driven by expansion in Canada.

Other regions, including China, reached JPY 5.3 billion, growing steadily as the number of countries where it is launched increases. With growth across all regions, we are increasingly confident in achieving full year forecast of JPY 58 billion.

Next slide, please. Next, turning to LEQEMBI.

LEQEMBI is the only anti-beta antibody indicated for early Alzheimer's that can be administered over long term. Its key characteristic is that it removes both amyloid beta protofibrils and amyloid plaque, which have been reported to be potentially neurotoxic.

Through this dual action, LEQEMBI is expected to prevent the decline in cognitive and daily functioning by slowing AD progression. Currently, it is approved in 53 countries and territories for the treatment of early AD.

Additionally, regarding subcutaneous formulation, it is approved for maintenance treatment in the U.S. and progress is being made to expand globally.

LEQEMBI global revenue in the first 3 quarters was JPY 61.8 billion, more than doubling to 109% year-on-year. By region, the revenue was JPY 31.2 billion, in the Americas, JPY 17.9 billion, in Japan, JPY 8.3 billion, in China, JPY 4.4 billion, in EMEA, East Asia and Global South, with all regions achieving steady growth.

In the U.S., maintenance dose approval laid a solid foundation for high treatment continuation rate after 18 months. Furthermore, subcutaneous formulation with auto-injector or SC-AI for maintenance treatment was launched last October.

The revenue in the Americas is growing steadily at 71% year-on-year. In Japan, there was an impact from 15% drug price reduction in November last year, but continues to grow steadily and achieved revenue growth of 115%, more than doubling from the previous year.

In China, access is widening, particularly in the private market, achieving approximately threefold increase in revenue or 201% year-on-year. LEQEMBI is also included in the commercial insurance innovative drug list.

Increased access in China starting from the second half of 2026 is expected. I would like to report to you that smooth progress is being made to achieve the full year forecast of JPY 76.5 billion in global revenue.

This slide shows the overview of our initiatives for value maximization for LEQEMBI. One of the main characteristics of LEQEMBI is that early start of administration and long-term administration extend clinical benefits.

Leveraging these characteristics to maximize the value of LEQEMBI, we believe it is crucial to optimize the entire pathway from diagnosis to treatment all the way up to long-term follow-up. The top part of the slide shows the current diagnosis and treatment pathway, and we aim to shift from here and establish a new more efficient pathway as shown below.

Specifically, qualified referral flow from PCPs to neurologists, enhanced mutual coordination between the 2 prompt A-beta testing with wider penetration of BBM administration at home enabled by the introduction of the SC-AI simplification of administration with SC-AI introduction and more options, including at-home administration. Through all these measures, we will promote patient-centric treatments.

With such transformation of pathway, we see greater potential to shift to new pathway. By reducing the time before introduction of LEQEMBI treatment and expanding the capacity of medical institutions, we aim to make AD pharmacological treatment established as a common option from early stage to realize patient-centered highly convenient treatment.

Subcutaneous injection with auto-injector SC-AI is an administrative option that patients can choose in addition to IV infusion. This is an important driver that will improve patient convenience as well as expand capacity of care providers.

In the U.S., IQLIK 360 milligram, for maintenance treatment, which can be used after 18 months of IV infusion treatment was launched in October last year. Among anti-amyloid beta antibody, only LEQEMBI has this treatment option.

This enables self-administration or administration by care at home, reducing the burden of hospital visits while increasing the options of administration for patients. SC-AI made by Terumo is designed to be easy and safe to use.

Human factor test confirmed that it can be used safely and effectively. The time it takes to administer with one SC-AI is on average 15 seconds, making it very practical.

Dr. David Watson, who has the largest number of patient entry in Clarity AD study conducted the patient survey of those who participated in SC substudy and supported our CTAD presentation last year.

The results showed that subcutaneous administration achieved a very high degree of satisfaction and convenience. Almost all patients chose subcutaneous formulation over IV infusion.

There were many voices about feeling comfortable regarding self-administration and convenience in daily life, confirming that the treatment is less burdensome, less time-consuming and easier to accept. As for SC-AI regulatory filing status, submission is already filed for IQLIK 500 milligram that can be used in initial administration, initial treatment.

Priority review was granted, PDUFA date is set for May 24, 2026. We have also submitted filing for SC-AI 500 milligrams in Japan and China as issued in the news release today, priority review designation was granted in China.

In the filing, one of the strengths of Eisai, which is modeling simulation was used to show PK/PD equivalence with IV infusion to achieve expeditious submission. As we announced or we will continue to work in collaboration with regulatory agencies and medical institutions in various countries as we continue this development.

A confirmation of A-beta accumulation in the brain using blood-based biomarkers or BBM is a use of technology that can transform the front end of AD diagnosis and is a major driver that supports the expansion of demand for LEQEMBI. By using BBM in screening, it is known to increase the A-beta positive rate in PET CSF test to follow.

We also believe that wider use of BBM as a stand-alone A-beta confirmatory testing will streamline diagnosis process considerably. In the U.S., FDA clearance of IVD opens the way for clinical use, development of guidelines, including from AA, Alzheimer's Association and CMS application of national payment rate are expected to lead to greater use of BBM as confirmatory testing not only for screening.

This makes it possible to potentially substitute PET CSF shortening diagnosis lead time. In Japan, China and in Europe, we also see progress in regulatory reimbursement and operation activities.

Based on the medical care system in each region, we are strengthening criteria clarification, initiation protocol standardization and collaboration with clinical laboratory companies. With implementation of BBM, there will be progress in streamlining of A-beta diagnosis, opening further opportunities for LEQEMBI treatment and greater demand.

Let me now give you an update on LEQEMBI in the U.S. In the U.S., key evidence concerning long-term administration and safety is more widely understood.

Accordingly, more physicians are prescribing LEQEMBI, the indication of maintenance therapy that the only LEQEMBI has. As a result, around 80% of patients wish to continue treatment after 18 months, achieving high continuation rate.

The new diagnosis approach with BBM and introduction of treatment option of IQLIK have begun to contribute to stable increase in demand. BBM diagnosis increased 17% on average in the last 3 months.

We also have clinical data showing that 10% of total patients received A-beta confirmatory diagnosis using BBM. In January this year, national payment rate was applied by CMS which we think will be another tailwind for higher penetration of BBM.

IQLIK Medicare Part D formulary listing is expected in January 2027. Until then, it is possible to seek insurance reimbursement using medical exception process, which so far has approval rate of over 80% currently.

The use of IQLIK from the start of LEQEMBI treatment or IQLIK for initial treatment was granted priority review status by FDA. PDUFA action date is set for May 24 this year.

We are making ample preparation for the launch. If approved as scheduled, we expect the listing in the formulary to occur at the same time as that for maintenance treatment.

These various initiatives are mutually creating positive spiral, resulting in steadfast growth of LEQEMBI in the U.S. In fiscal 2025, we are making good progress to achieve full year plan of JPY 40 billion, and we expect acceleration in pathway streamlining from the second half of fiscal 2026 with IQLIK initial treatment.

In Japan, primary specialty care coordination that supports continuity of treatment is being established, namely good progress is made in enhancement of the referral network from primary care physicians increasing the number of initial introduction facilities and development of follow-up capacity. Consequently, from the visit to PCP, diagnosis and treatment initiation at introduction facilities up to the transitioning to follow-up facilities, the care coordination structure is steadily being established.

Treatment continuation rate after 18 months is high at approximately 80%. We believe this is the result of broader understanding of the benefits of long-term administration of LEQEMBI by the health care professionals.

To realize patient-centered treatment, we have completed SC-AI submission in November last year, aiming for launch before the end of 2026. In Japan, drug price reduction of 15% took place last November, but this was absorbed, and we are making steady progress toward achieving full year forecast of JPY 24 billion.

In China, in the first quarter to respond to tariff risks, there was a temporary inventory adjustments, but on a real basis, demand kept increasing. Revenue in the first 3 quarters was JPY 8.3 billion, showing good progress in achieving full year forecast of JPY 9.5 billion.

In addition, last December, LEQEMBI was included in the Commercial Insurance Innovative Drug List, which is a new policy by the Chinese government to support development of innovative drugs and access. In the second half of fiscal 2026 and beyond, commercial insurance covering LEQEMBI treatment is scheduled to be introduced one after another.

SC-AI filing was also submitted in China and priority review was granted with launch expected in fiscal 2027. With respect to our pipeline, in-house discovered orexin 2 receptor agonist, E2086 clinical development is well underway.

In type 1 and type 2 narcolepsy patients, once-daily administration Phase II trial will be starting before the end of Q4. As it was introduced in the slide on DAYVIGO, Eisai has an in-house orexin pathway platform related to sleep and wakefulness.

E2086 is an orexin 2 receptor agonist discovered based on this platform. E2086, single-dose proof of mechanism study in narcolepsy type 1 patients has already been completed.

In this study, once-daily administration of E2086 significantly reduced excessive daytime sleepiness compared to placebo and the comparator. At the dose that demonstrated efficacy, E2086 was well tolerated and have favorable safety profile.

This was confirmed. There was no observation of liver dysfunction and visual abnormality.

Orexin agonist is a very competitive area, but Eisai expects that E2086 can be a best-in-class compound. That expectation was supported by the proof of mechanism study.

Please stay tuned to hear the results from the Phase II study in the future. These are the key events in the pipeline, I would like to start from neurology area.

On the slide, 18 continuum is shown. This means that Alzheimer is understood as a continuum of various disease stages.

At each stage, amyloid tau or neuro-degeneration is targeted in drug discovery in a multifaceted approach to AD. As for LEQEMBI, 360-milligram SC-AI maintenance treatment is already approved in the U.S., 500-milligram initial treatment is under review by regulatory authorities in Japan, U.S.

and China. AHEAD 3-45 Study in preclinical AD patients who do not have symptoms is progressing smoothly and top line results are expected before the end of fiscal 2028 according to the schedule.

anti-Tau antibody, etalanetug is in Phase II in sporadic AD or common form of AD. And in Phase II/III in familial AD patients, we expect to obtain a number of important data beyond fiscal 2027.

E2511, a small molecule aiming to regenerate neural function is scheduled to start Phase Ib in patients in E2086 orexin 2 receptor agonist Phase II study is also expected to start before the end of Q4 this fiscal year. In oncology, we will be discussing with authorities of various countries regarding Lenvima in combination with HIF-2 alpha inhibitor in RCC to prepare for submission.

As for -- as our CFO, Mr. Oyama introduced, we expect to file submission in Europe for licensing taletrectinib in the first half of 2026.

The second licensing product, Serplulimab filing is expected in Japan in fiscal 2026. E7386 CBP beta-catenin inhibitor Phase Ib/II results are also expected within fiscal 2026.

This is the summary slide. Q3 performance remained solid, driven by organic business growth.

We are progressing steadily toward achieving the business plan target. But in view of spending in Q4, full year scale remains unchanged.

Two oncology assets were in-licensed to enhance oncology area pipeline, laying a solid foundation to maintain and expand oncology franchise. The growth of 3L is contributing to steady enhancement of corporate value.

pharmaceutical business as a whole achieved revenue growth. LEQEMBI steadily expanded across all regions.

Through BBM and SC-AI and other efforts, we have a ready environment for further growth. Pipeline is advancing on multiple fronts and is being expanded through both in-licensing and in-house R&D to achieve sustainable corporate value enhancement.

With that, I would like to conclude the report on the Q3 business and pipeline. Thank you very much for your kind patience.

Can you hear me?

Yes, we can.

This is Yamaguchi of Citigroup Securities. I have 2 questions.

First one is -- as CFO, Oyama explained, the performance up until the third quarter this fiscal year, it seems to be quite strong. But at the time of the earnings call for Q2, there was Q&A about this and JPY 35.5 billion, which was incorporated in the business development profit.

How would you take on that? Do you think that there will be a further upside?

If you include that, then there will be upside. And without that, I think that you are able to achieve the company's guidance.

Could you please explain on that point?

Mr. Oyama is going to respond to your question.

Yes. In other income and expenses, we had a forecast of the onetime temporary profit, which was related to it a partner.

So for this fiscal year, it is still uncertain. Through to the third quarter, there hasn't been much of such, but there is a potential that there will be such profit incurred in the fourth quarter.

Regarding this, we would like to say that considering the fact that organic business is steadily growing, but without such temporary profit, we are working toward achieving our forecast. But for the fourth quarter, we have some points to mention.

As we said at the time of the earnings calls in the second half -- second quarter, we are conducting the structural reform for EMEA, therefore, costs will be incurred in the fourth quarter. And on top of that, R&D expenses, which will be allocated to the development and research of the key pipeline assets.

So based upon these assumptions, organic business will be absorbing those negative impacts from those factors.

One point to supplement. As you mentioned regarding the cost to be incurred in EMEA and R&D expenses, do you think the cost will be exceeding the current guidance of the company?

But do you think that in Q4, do you think that the revenue or profit will offset such negative impact of the structural reform or other R&D expenses cost in the fourth quarter?

Mr. Oyama is going to respond.

And we have seen the strong performance until the third quarter. And because of the impact of the structural reform, there has been the optimization of the R&D activities.

Therefore, if you just look at the R&D expense line, there will be a potential downside. However, regarding the structural reforms for EMEA, we believe that these costs will be contained within the current expectation.

because we have already incorporated factored in a significant amount for the structural cost in EMEA. Therefore, you can stay with the estimate of JPY 54.5 billion.

My second question is about LEQEMBI. Well, the growth has been on track and performance has been within your expectation.

That is good. And first one is related to the initiation of maintenance treatment utilizing SC.

And then the patients who are going to switch to SC, how -- what percentage of patients who are switching to SC-AI? But I think that Kisunla is catching up with LEQEMBI in terms of revenue.

So do you think there has been any impact by such competitors' drug in the field?

Thank you. For your first question about the SCC maintenance treatment -- SC maintenance and what percentage of patients are switching to SC for maintenance treatment?

Mr. Haruna is going to respond.

Thank you very much for your question. My name is Haruna.

I am responsible for LEQEMBI in the United States. First, IQLIK for maintenance treatment, what percentage of patients are using this?

Currently, it is only -- just has been launched and a short time has passed since the launch. Therefore, we do not have any numbers to be disclosed now.

But after 18 months administration and then about 80% or over 80% of patients who have completed 18 months treatment wish to switch to the maintenance treatment. Therefore, there has been quite a high number of patients who want to continue on the treatment.

And IQLIK maintenance treatment impact on the revenue or plan of the sales it is performing well, exceeding the original plan. And week by week, the number of patients as well as the sales are increasing.

Therefore, they are continuing to expand. Regarding the insurance coverage procedures, medical exception process procedures are not constituting a bottlenecks.

Therefore, actually, over 80% of patients are getting the approval for their reimbursement. The overall performance has been quite strong, and we are making steady progress.

Thank you very much.

Regarding the second question about the competitors' situation, Mr. Naito is going to respond first.

And regarding the U.S. situation, Mr.

Haruna and for Japan, Mr. Yusa is going to respond.

Thank you very much for your question. Considering this market, first of all, we have to think about the fact that Alzheimer's disease is a progressive and fatal disease.

I think that is very important to consider. From that perspective, LEQEMBI is showing -- demonstrating the effect of the early initiation of treatment and also benefit for the patients as well as for their lifestyles.

These benefits can be considered overall. And that is the characteristics of LEQEMBI.

When we consider this area, not simply removing the amyloid beta, but also long-term control of amyloid beta is considered to be very important. Therefore, the long-term administration can bring about the benefit by this drug.

So the early initiation of the treatment as well as the long-term administration are the characteristics of this drug. And in Japan and U.S.

and China, SC-AI is being developed, and we have completed submissions in FY 2026, this will be approved in major markets. And from the initial treatment, it is possible for patients to start using the SC-AI.

So these are the characters, as I mentioned earlier, considering the lifestyles of the patients, and there will be increased options available for patients. That means that in terms of convenience, this is going to be a significant benefit.

Considering all of this, LEQEMBI as a treatment for AD is expected to become a gold standard. We are confident in this.

Furthermore, in DMT market, over the past 12 months, that has been doubled and the number of new patients as well as the number of prescriptions of LEQEMBI have also increased as such. Considering these, in each region, I would like to ask Haruna-san and Yusa-san to reported to you.

First, Mr. Haruna, could you please take the floor?

Thank you very much. This is Haruna.

I would like to respond to your question about the status in the United States. As you pointed out, a competitor's drug, Kisunla.

In terms of sales share in the third quarter, it was 50-50, evenly split. On the other hand, in the value terms, LEQEMBI and Kisunla compared.

The wholesale acquisition costs are different. And for LEQEMBI, the patients are switching to maintenance treatment with half the dose.

So that may have been impacting. In order for us to understand the situation of the competitor drugs, we are utilizing different sources, including internal source.

And we are looking at the share and LEQEMBI is expected to have about 65% to 70% of the share in terms of the number of patients. Therefore, the new patient -- new prescriptions are increasing and the market itself is expanding.

Therefore, LEQEMBI is expected to make -- to grow steadily. Continuously, we needed to differentiate us from other companies' drugs, particularly removal of amyloid and also long-term control of amyloid are not exactly the same.

This is a major -- for major chronic neurology disease. Once biomarker turns negative, the treatment is discontinued, but it's not the way for the treatment of the chronic neurologic disease.

And the value of the long-term administration of LEQEMBI and differentiating the clinical profile and also expanding the number of options available for administration. These are considered to be the differentiating features.

And LEQEMBI has the clinical data over 4 years, and this is the only drug of this and also focusing on the disease control in a continuous manner, these are the value proposition we would like to focus on. During the third quarter at the CTAD, a new presentation was made on the data to enhance the brand power, particularly LEQEMBI's maintenance treatment and also discontinuation treatment by nivolumab, a comparison was made in the presentation, we believe that we have been able to demonstrate the significance of continuous treatment with LEQEMBI.

As such, the continuous treatment is only available with this drug alone. And therefore, we -- and we have the 4-year data, which shows the strength of this treatment.

And IQLIK -- in 2026, IQLIK initiation therapy will be added, and there will be increased best-in-class convenience and also the benefits will further differentiate us from other companies' drugs. And LEQEMBI is expected to continue to grow steadily from next fiscal year onward.

So this is all about U.S. So I'm sorry, we -- I have made a lot of time, so you can skip your response to question about Japan.

This is Wakao from JPMorgan. First is about LEQEMBI initial treatment.

After the approval, how will it change the penetration in the market? The other day, according to Biogen's briefing session, they expect linear growth.

Not approval, but in January 2027, after coverage, they expect the growth in sales. Medical exception process that was explained by Eisai before using that medical exception process and if approval is obtained after May '24, sales immediately is likely to start according to Eisai's explanation.

And it seems that there are differences. Could you address this?

Mr. Haruna will respond.

Thank you for that question. Medical exception process, I've mentioned medical exception process earlier.

Currently, in more than 80% of the cases, insurance is reimbursed. In January 2027, after listing in the formulary, smoother reimbursement is expected.

That is for certain. But at the moment, insurance reimbursement is not posing as a barrier.

That is also confirmed. Initial treatment, once it is approved, we believe that with IQLIK there will be acceleration of growth.

Even before waiting for January 2027, we expect the pickup in pace of sales expansion. Then -- and of course, it depends on how to interpret Biogen's comments.

But would it be correct to understand that Biogen's explanation was rather conservative. Whether conservative or not, I would rather not comment.

But in January 2027, we expect even further expansion. That I would say -- and so we can consider that there is a 2-stage growth in IQLIK.

And based on that explanation, and recently, organic growth is very strong. Next fiscal year, ROE of 8% was the target.

But it is -- it appears that a high probability this can be achieved. So next fiscal year, ROE of 8%, what do you think is the prospect of achieving this?

What is the current view?

Mr. Oyama will respond.

Regarding the next fiscal year, fiscal 2026, we are currently developing the business plan. LEQEMBI business will be supported by subcutaneous formulation.

We expect approval in Japan and the U.S. and excluding R&D expense, we expect to turn profitable and organic business profitability improvement is also expected.

As a result, in the medium to long term, more than 10% of operating margin and ROE, capital efficiency of 8% and further improvement, that direction remains unchanged. As for medium- to long-term growth of this company, we have discussed 2 in-licensed products, but enhancement of pipeline is considered the utmost priority.

So the direction remains unchanged. But with the short-term capital efficiency, we don't want that to be a constraint in strategic investment.

And that is how we plan to manage our business. Organic business is steadily growing, and we are also implementing strategic investments.

With that in mind, we hope that you will wait for future disclosure of results for next fiscal year.

So not in fiscal 2026, but in '27 -- fiscal '27 or beyond, you believe that it is more likely to achieve ROE of 8%, meaning you don't believe you can achieve 8% ROE in fiscal 2026? Sorry for this complex question.

The target and direction that we are aiming at, remains unchanged, but business plan is currently being developed. Please understand that we are currently developing the business plan.

Can you hear me?

Yes, I can hear you.

Okay. Perfect.

So I have a couple of questions on LEQEMBI. The German government agency, IQWiG, they concluded that LEQEMBI offers no additional benefit over basically Aricept, based on previously undisclosed information that you provided to the agency.

Could you explain to us what data did you provide IQWiG? How does this opinion affect LEQEMBI's prospect in Germany, in particular, and Europe in general?

So that's my first question. The second one is also on LEQEMBI in the China's Commercial Insurance Innovative Drugs List has been in the list for about 5 weeks now.

I wanted to see what kind of impact have you seen on the ground in China?

For your first question, Mr. Iike is going to respond.

Thank you very much for your question. In Germany, the negotiations are going to be starting from now on.

The clinical benefits data was submitted to reach their conclusion, as you mentioned. But going forward, there will be additional data information will be submitted, and we will continue to have negotiation with the authorities.

So please wait until we see the conclusion.

Regarding your second question about China, Sasaki-san is going to respond.

Yes. Thank you very much.

My name is Sasaki. I'm responsible for China business.

Let me respond. For advanced innovativeness and also the benefits value and for the new -- the commercial insurance innovative drug risk that has been established in China, LEQEMBI has been included in this list.

And going forward, together with the insurers, we are going to have negotiations. And in the second half of 20 -- fiscal year 2026 onwards, there will be an expanded coverage of the treatment by LEQEMBI under this commercial health insurance, and we aim at expansion further.

By this expansion of the commercial coverage, and there will be a reduction of the burden of the patients and also treatment continuation rate is expected to improve as well on top of the increase in the number of new patients. By having this list, including LEQEMBI, we expect that there will be further acceleration of adoption by hospitals, and we are starting to see such expansion gradually now.

So that was my response to your question.

This is Muraoka from Morgan Stanley speaking. ROE of 8% was the earlier question.

And I have a related question. Next fiscal year, how much substantial improvement in financial performance can we expect?

What level can we expect from May guidance? It's rather ambiguous.

We can see that you have strong determination. But when it comes to actual numbers, it is not as clear.

So could you elaborate on this further? What expectations can we have for next fiscal year as we wait your announcement in May?

Until about a month or 2 months ago, I was responsible for this area. Therefore, allow me to answer your question.

Organic business growth in comparison to last year was very strong this year, as Mr. Oyama just reported earlier.

On the other hand, in fiscal 2025, LEQEMBI business commercial investment still is being made, and it is still in the loss-making situation. But in fiscal 2026, we intend to turn profitable.

Therefore, organic business next fiscal year in fiscal 2026 is expected to continue strong growth. Furthermore, onetime items in nonorganic area, how much can we achieve?

It depends on that as well. I believe what is likely to be your consensus view for Eisai's fiscal '26 operating profit.

In comparison to that consensus, we would like to aim at a higher level.

For our information, you've mentioned that because you have to also acquire new assets, cost is expected to be incurred according to Mr. Oyama, but it is not included in core profits.

I don't think costs will be incurred based on IFRS. I was not able to understand fully.

Mr. Oyama will respond.

As you rightly mentioned, acquisition cost is going to be capitalized as asset. But because of acquired assets, R&D expenses may occur as larger the size of such deals, potential for increased R&D cost is higher.

So we should not put restraint on such potential deal. That was what I meant to say.

Basically, the initial upfront payment will be capitalized as asset. That is correct.

Your understanding is correct.

This is Sakai speaking of UBS Securities. Slide deck was very easy to understand and clearly described.

And my question is about the in-licensed assets in oncology. What about the U.S.

oncology? And I think it is going to be costly.

I don't think that you have a leeway available on your current balance sheet.

Mr. like going to answer your question.

Mr. Sakai, thank you very much for your question.

So far, 2 deals were made. One is mainly in Europe and Canada, another is in Japan.

And what about Americas? Lenvima will continue to be valid until 2030.

And in the United States, we have been also considering these deals as well. Regarding your question whether we have such allowance or leeway on your assets, yes, we would like to say we have.

And we have had a disciplined policy in the financial structure. But together with CFO, Mr.

Oyamao, we'd like to make a shift a little bit towards these growth investments. So -- and we believe that we have available assets on that.

And I have a second question regarding Orexin. I may have heard a statement that there is potential licensing out.

But so far, have you considered this? Or are you going to continue developing this project on your own?

Mr. Ido is going to respond to your question.

I am in charge of R&D. As you have pointed out, as you said, E2086, in principle, we are developing this product on our own, and we are about to start a Phase II study.

About oncology, about the licensed products. This is related to Mr.

Sakai's earlier question, in order to maintain oncology business inorganic deals will be pursued proactively. Does that mean that you will be actively pursuing inorganic deals?

As for licensing products, how will R&D expenses be shared? That was not touched upon.

If you could provide information.

Mr. Naito will respond.

About the direction of oncology, as Ms. Sogi, you've rightly mentioned, that is the policy.

CBP-beta catenin, E732886 (Sic) [ E7386 ] was also mentioned. We will also develop our in-house oncology assets in our pipeline.

But currently, we need to enrich our pipeline with in-licensed products, which is an important priority issue. That is our recognition.

Going forward, how to split the expenses? I would like to ask Mr.

Oyama to respond. The second question will be addressed by Mr.

Iike.

Thank you for your question, Ms. Sogi.

First, about the first question, Taletrectinib for Europe. This is soon to be filed for submission.

So research and development costs will not be incurred so much. It will be sales and marketing expenses.

As for anti-PD-1 antibody for Japan, Serplulimab, we cannot give you the details of the agreement, but our research development cost burden is considered to be small.

I have a question regarding LEQEMBI in China. Innovative commercial insurance, innovative product listing was achieved.

I understand that this is a private insurance. And NRDL this year, you may not have said this year, but regarding NRDL, I understand that you will be preparing to file so that they can be included in the list.

Are these 2 lists taking place in parallel? Or are they separate?

Mr. Sasaki will respond.

Thank you for your question. This is Sasaki speaking.

NRDL, this is a national reimbursement drug list reimbursed with national fiscal resources. But rather than being listed here, LEQEMBI is listed on commercial insurance innovative drug list, which is an innovative -- list of innovative product for high clinical benefit.

And because of the intention of Chinese government to increase private insurance coverage for such innovative product, this list is published by Chinese government. So commercial insurance listed product, will it be listed in NRDL at the same time?

That is not the case.

This is Ueda of Goldman Sachs speaking. My first question is about Lenvima.

In Americas, during the third quarter under review, the performance was strong. Going forward, IRA, the access is improved.

And do you think there has been such a contribution? Or are there any temporary factors which are making the performance of Lenvima strong?

Mr. Haruna is going to respond.

Thank you very much for your question. I am responsible for Lenvima in the Americas.

My name is Haruna. First, Lenvima in the United States, Americas is performing quite strongly because of the redesign of IRA, access is being improved, not only with that, but for RCC and thyroid cancer, since launch 10 years ago, regarding these existing indications, we are seeing increased shares for RCC.

So far, clear cell data was available, but non-clear cell data is also being expanded and NCC and also the package insert for both indications, there has been a strong recommendation under the guideline for this particular drug. Therefore, with these Lenvima is growing for RCC, which I believe will continue next year as well -- next fiscal year as well.

Over the past fiscal years, utilizing AI for omnichannel approach is being expanded for all indications, particularly in the 10 year DTC has contributed to the expansion of sales. For all indications, we expect to see growth.

For fiscal year 2026, this trend will continue. IRA redesign has been impacting.

But exceeding that, I believe that Lenvima will continue to grow. And also the submission for the LITESPARK-011 will be conducted.

Therefore, we believe that there will be further growth with Lenvima.

Second question is related to the strategic investment. Over the past several years, Eisai has been licensing out to receive short-term onetime income in order to generate short-term revenue as well.

But recently, there has been several deals as has been explained in the presentation, you said that you would like to be proactive in making such strategic investment going forward. Could you please give us your background for why you think in that way?

Currently, Lenvima will be valid until 2030 or LEQEMBI is ramping up and -- or R&D expenses peaking out with LEQEMBI. So with these in mind, could you please give us your guidance or how you forecast into the future?

Mr. Iike is going to respond.

Thank you very much. As Ueda-san mentioned, exactly what you have mentioned is what we assume.

Lenvima in the United States, last year, our high-purity patent was granted and protected. And above all, the profits from LEQEMBI business are turning into the black ink.

As we have been telling you, JPY 370 billion level of proactive investment has been made into this program for about 5 years in the past, and that has supported our profits and by being supported by onetime items. But from now on, we believe that we have switched the gear towards the return generation period.

So that's why we have turned a policy to more focusing on the proactive investment for the growth.

This is Hashiguchi from Daiwa Securities. ROE of 8% was discussed several times.

I would like to clarify the way of thinking. At information meeting in last year, according to what I understood, the onetime exists in fiscal '26, but there will be no onetime in fiscal '27 and yet ROE of 8% will be the target.

You have added various provisos today, but excluding those provisos, basic policy remains unchanged. Is that correct?

Mr. Iike will address that question.

Mr. Hashiguchi, thank you for your question.

Basic policy remains unchanged. And what you've described, Mr.

Hashiguchi is also correct. In fiscal 2026, including onetime ROE of 8% will be the target.

And in fiscal '27, excluding onetime factors in organic basis, we aim at a 10% level of ROE. That was what Mr.

Keisuke Naito announced in March last year in information meeting. That remains unchanged.

But regarding these onetime items, including sales of assets, is that going to be utilized? Or rather, are we going to make growth investments and continue to hold on to assets?

That is what we are trying to determine right now, and we hope you understand.

I myself thought that including onetime in fiscal '26 to achieve 8% ROE rather than persisting on this, I believe that in '26, efforts should be focused to ensure medium- to long-term growth. Inclusive of that, regarding medium- to long-term strategy, we hope that there will be an information meeting to discuss such a strategy.

Do you plan to have such a meeting in March this year again? Or is it going to take more time before you put together such strategy?

Mr. Hashiguchi, thank you very much.

Regarding information meeting, every year, we held an information meeting in March, but we plan to hold information meeting in -- at the end of May this year. So details will be announced later.

And the background of that and my question regarding medium- to long-term strategy, I hope that in a comprehensive way, there will be a presentation. And does that mean that internal discussions still are required before presentation can be provided for medium- to long-term strategy?

That will be addressed by Mr. Naito.

Internal discussions, we are trying to thoroughly complete internal discussion. And before discussing these before the annual earnings results, we felt that it would be better and more realistic to discuss those after we have annual results as well.

Thank you.

Can you hear me?

Yes.

Two in-licensed deals were recorded this for lung cancer and GI cancer. In these areas, you have never attacked these areas of therapies.

So in these new therapeutic areas, how do you plan to develop your market? Could you please share with us your strategy?

Mr. Iike is going to respond.

Thank you very much for your question. First, as you see on the left-hand side, this is about the lung cancer indication for this product.

For NSCLC, not all the NSCLC, but this is indicated for the patients with the mutation of specific genes accounted for about 2% of the entire NSCLC. Therefore, prescribers, physicians and hospitals which can provide such treatment are limited.

Therefore, field people reps of Eisai who are available in Europe can cover such accounts. In some cases, lecanemab is dealt with field personnel can also deal with these accounts.

So in terms of the efficiency, we believe we can maintain high efficiency. So here, you see ROS1-positive, the lung cancer.

This drug has been demonstrated to be very efficacious in clinical trials. On the right-hand side, you see in Japan, PD-L1 antibody like Opdivo or KEYTRUDA.

However, indications aimed at those diseases, which are not captured by other competitors. So that is the policy of the partner.

So the binding mode of PD-1 is also different from others, and it is a quite potent PD-1 antibody. For GI tract cancers, which is more common in Asia, including Japan.

So what we are aiming at getting approval first is not the non-small cell, but small cell lung cancer. So compared to the non-small cell lung cancer, we do not have a large number of patients.

However, there is still a very high unmet needs. And Opdivo and KEYTRUDA is not indicated for this disease.

Therefore, we will be able to cover this market as well. And also together, Lenvima, we are working with Merck.

And I believe that there will be no cannibalization potential with that. So we have high expectation.

Regarding the extensive stage NSCLC, this is going to be the first for the PD-L1 antibody and with the 2 companies, OS hazard was about 0.7. And serplulimab has a little better than that.

But comparing head-to-head, I think that the probability of having advantage over competitors' drugs is still slim. So I thought that you have a clear strategy to compete against those, but you don't have one.

For the first indication, that has been already approved in 40 markets. Therefore, we believe that the probability is high.

And this is different from PD-L1 antibody. This is because this is PD-1 antibody.

Therefore, we believe that we can be competitive enough. And colorectal cancer as the next target indication, particularly MSI high is indicated with KEYTRUDA.

However, non-MSI high, this is going to be the first indication to be granted to any drugs. Therefore, we can have a differentiating factor with this highly expected new drug.

In colorectal cancer, Atezo and [ IKA ] combination was demonstrated to be efficacious in asthma last year. But do you think that this drug can be used and efficacious with monotherapy?

Yes, that is correct.