Ladies and gentlemen, thank you very much for your patience. Now we would like to start FY2025 third quarter financial results presentation.

I am from corporate communications. My name is Asakura.

I will be facilitating today's session. In this presentation, we are going to use Japanese and English.

We have simultaneous interpretation service available. Please click on the interpretation icon at the bottom of the screen, and please select the language of your choice.

If you choose original audio, you should be able to hear original audio. Then on the Zoom screen, on the live streaming, we are going to put up Japanese presentation material.

We have uploaded Japanese and English presentation material in IR library on our corporate website. Whenever necessary, please feel free to download the material.

Today's presenters are Mr. Ogawa, Senior Executive Officer, CFO; Mr.

Abe, Head of R&D Division; and Mr. Ken Keller, Head of Global Oncology Business.

Now Ogawa and Abe are going to take you through the financial results for the third quarter FY2025, and then we are going to open the floor for the Q&A. Today's session will be recorded.

I would like to ask for your cooperation. Now Ogawa-san, please.

This is Ogawa. Thank you for participating in Daiichi Sankyo's earnings briefing today despite your busy schedule.

Now I will explain the consolidated financial results for the third quarter of fiscal year 2025 announced at 15:00 today based on the materials. Please look at slide 3.

The content I will discuss today is as follows: fiscal year 2025 third quarter consolidated financial results, business update, research and development update. The research and development update will be explained by Abe, Head of R&D Unit.

We will take your questions at the end. Please look at slide 4.

These are the highlights of the current earnings. Our flagship products, the anti-cancer agents Enhertu and Datroway, continued to grow steadily, and revenue increased significantly.

The cost of sales ratio improved compared to the second quarter, and core operating profit increased by 8.8% year on year. No additional major temporary expenses were incurred in the third quarter.

There are no changes to the fiscal year 2025 consolidated earnings forecast from the October announcement. Please note that as reference information, the latest sales forecasts for each product are listed in the supplementary earnings materials.

Although there are some movements in individual products, there is no change in total revenue from the October announcement. Please look at slide 5.

This slide shows an overview of the fiscal year 2025 third quarter consolidated financial results. Revenue was ¥1,533.5 billion, an increase of ¥165.9 billion, or 12.1% year on year.

Cost of sales increased by ¥13.8 billion year on year. SG&A expenses increased by ¥93.7 billion, and R&D expenses increased by ¥38.1 billion.

As a result, core operating profit was ¥249.2 billion, an increase of ¥20.2 billion, or 8.8% year on year. Operating profit, including temporary income and expenses, was ¥233.8 billion, a decrease of ¥14.5 billion, or 5.9% year on year.

Profit attributable to owners of the company was ¥217.4 billion, an increase of 8.8—¥8.8 billion, or 4.2% year on year. Regarding actual exchange rates, the dollar was ¥148.75, a yen appreciation of ¥3.81 compared to the same period last year.

The euro was ¥171.84, a yen depreciation of ¥7.02 compared to the same period last year. Please look at slide 6.

From here, I will explain the factors for increases and decreases compared to the same period last year. Revenue increased by ¥165.9 billion year on year, and I will explain the breakdown by business unit.

First, for the Japan business unit and others. Sales of Datroway, Belsomra for the treatment of insomnia, and Lixiana, direct oral anticoagulant, and Tarlige, the pain treatment drug, increased.

On the other hand, sales of Inavir, influenza treatment drug, decreased. Unrealized profit on inventory of Daiichi Sankyo Espha was recorded as realized profit in the previous period, resulting in a revenue increase of ¥10.7 billion.

The actual increase or decrease in the vaccine business, which is affected by seasonal demand, after provision for returns was an increase of ¥300 million. Next, I will explain the overseas business units.

Here, the foreign exchange impact is excluded. Oncology business increased by ¥113.3 billion due to growth in sales of Enhertu and contribution of Datroway to sales.

American region decreased by ¥24.3 billion due to the impact of generic entry for the iron deficiency anemia treatment Venofer and the impact of price competition for Injectafer. EU specialty business increased by ¥13.6 billion due to growth in sales of Nilemdo/Nustendi for the treatment of hypercholesterolemia.

ASCA business, responsible for Asia and Latin America, increased by 13—¥35 billion as Enhertu grew mainly in China and Brazil. Contract upfront payments and development sales milestones related to partnerships with AstraZeneca and US Merck in the third quarter resulted in an increase of ¥20.9 billion.

We received development milestone income from AstraZeneca associated with approval for first-line treatment of HER2-positive breast cancer in the US for DESTINY-Breast09 and received the second upfront payment from US Merck for R-DXd, which were recorded as sales revenue. The foreign exchange impact on revenue decrease was ¥3.3 billion overall.

Slide 7 shows the factors for increase and decrease in core operating profit. I will explain the ¥20.2 billion increase by item.

As explained earlier, revenue increased by ¥165.9 billion, including a foreign exchange impact decrease of ¥3.3 billion. Next, regarding cost of sales and expenses excluding a foreign exchange impact, cost of sales increased by ¥12.4 billion due to increased revenue and the recording of inventory valuation losses for Enhertu and others in the second quarter.

SG&A expenses increased by ¥100.3 billion, mainly due to an increase in profit sharing with AstraZeneca. R&D expenses increased by ¥42.6 billion due to increased R&D investment associated with development progress of 5 DXd-ADCs.

The expense decrease due to foreign exchange impact was ¥9.7 billion in total, and the actual increase in core operating profit excluding a Forex impact was ¥13.8 billion. Next, on slide 8, I will explain the profit attributable to owners of the company.

As explained earlier, core operating profit increased by ¥20.2 billion, including the impact of Forex. Regarding temporary revenue and expenses, again as explained at the second quarter briefing in late October, same period last year included temporary income from the sale of shares in Daiichi Sankyo Espha.

However, this year, we don't have such impact. Although there were incomes related to litigation with former shareholders of Ranbaxy, overall income decreased.

Furthermore, there was a ¥34.7 billion negative impact due to CMO compensation fee associated with the change in the launch timing of HER3-DXd as well as write-down of inventories of Datroway and HER3-DXd. Financial income and expenses contributed positively to earnings by ¥9.5 billion, mainly due to improved FX gains and losses.

Income taxes and so on decreased by ¥13.9 billion, reflecting lower pre-tax income and a lower effective tax rate compared to the same period last year. As a result, profit attributable to owners of the company increased by ¥8.8 billion year on year to ¥217.4 billion.

Next is business update. Please turn to slide 10.

This slide shows the sales performance of Enhertu. Global product sales for the third quarter of FY2025 increased by ¥102.4 billion year on year to ¥506.8 billion.

New patient share remains number one in all major countries and regions for existing indications such as breast cancer, gastric cancer, and lung cancer. Regarding new indications, we've started promotion for first-line treatment of HER2-positive breast cancer in the US last December, driving the growth in new patient share.

In China, we've initiated promotion for hormone-positive, HER2-low, or ultra-low chemo-naive breast cancer patients in December, followed by promotion for second-line treatment of HER2-positive gastric cancer in January. The NCCN guideline has seen new additions and updates for multiple cancer types.

First, Enhertu has been newly added as a category 1 recommendation for adjuvant therapy in HER2-positive breast cancer with high recurrence risk. For HER2-positive metastatic breast cancer, HER2 monotherapy was already recommended as first-line therapy based on data from the DESTINY-Breast03 trial, a second-line trial which demonstrated extremely high efficacy.

Additionally, based on data from the DESTINY-Breast09 trial, combination therapy with pertuzumab has been newly added with a category 2A recommendation. For HER2-positive uterine cancer, in addition to existing recommendations for endometrial cancer, Enhertu has been newly listed with a category 2A recommendation for endometrial carcinosarcoma.

For HER2-positive esophageal and gastric cancers, the recommendation level has been elevated from category 2A to category 1. Enhertu is already listed in the NCCN guidelines for numerous cancer types and is recommended for use.

We'll continue to generate data to pursue further new listings and category updates. Next, I will explain the sales status of Datroway.

Please refer to slide 11. Global product sales for the third quarter, fiscal 2025, reached ¥31.6 billion, representing 83.8% of the October forecast.

In addition to steady market penetration for the breast cancer indication in Japan and in the US, the lung cancer indication rapidly gained market traction in the US, significantly increasing the number of new patients. Globally, prescriptions were issued to over 3,000 cumulative patients, approximately 1.5 times more than the end of the previous quarter.

Sales growth significantly exceeded expectations in both the US and Japan, with lung cancer indication particularly driving sales in the US. Given these circumstances, we've updated our full-year forecast to ¥47 billion, up by ¥9.2 billion from the October forecast.

For both breast cancer and lung cancer, prescriptions have expanded beyond projections. This is primarily due to much higher-than-expected unmet needs, especially in the third line and later, leading to prescriptions for more patients than expected.

Additionally, awareness among healthcare professionals regarding AE management, such as stomatitis and dry eye, an area where we have focused on since the launch, has increased, and experience is being accumulated. Furthermore, Datroway has seen new additions and updates in the NCCN guidelines.

For triple-negative breast cancer, it's been newly added as a category 2A recommendation for first-line treatment. For EGFR-mutated NSCLC, recommended EGFR mutation coverage has been expanded from the existing category 2A listing, widening the opportunity for Datroway to make further contribution.

We'll continue to pursue further market penetration in existing sales regions and expand into new countries and regions while advancing efforts to obtain new indications. We are committed to delivering Enhertu and Datroway to as many patients as possible who need these medications.

Slide 12 shows an update on Seagen US patent dispute related to our ADC. Last December, the US Court of Appeals for the Federal Circuit issued a ruling reversing the district court's decision that ordered us to pay damages and royalties to Seagen, finding that Seagen's US patent was invalid.

The court issued a ruling affirming the US Patent and Trademark Office's decision that Seagen's US patent is invalid, dismissing Seagen's appeal. We highly value this ruling by the court.

Slide 13 is information about the briefing session. On April 8th, Japan time, we will hold the 6th five-year business plan briefing.

Once details are finalized, we will inform you. From here, this is the R&D update.

I will hand it over to Abe, Head of R&D.

Thank you. This is Abe.

I will talk about the R&D update. First, I will explain about 5 DXd-ADCs.

Next slide, please. In December last year, Enhertu, in combination therapy with pertuzumab, obtained approval for the first-line treatment of the patients with HER2-positive unresectable or metastatic breast cancer in the US.

As this indication based on the DB-09 study was approved under Breakthrough Therapy designation, Priority Review, and Real-Time Oncology Review program. Regulatory filings have also been accepted in Japan, China, and Europe.

Through Project Orbis, multiple regulatory authorities are proceeding with reviews. Next, please.

I will talk about the final analysis results of the DESTINY-Breast03 study presented at the San Antonio Breast Cancer Symposium in December last year. This is a phase 3 study that compared and verified the efficacy and safety of Enhertu and T-DM1 for second-line treatment of HER2-positive breast cancer.

As you can see, in Enhertu group, the median OS was 56.4 months, and estimated five-year survival rate was 48.1%, showing long-term significant efficacy compared to the T-DM1 group's median OS of 42.7 months and estimated five-year survival rate of 36.9%. In addition, no new safety findings were observed through long-term follow-up.

The incidence rate of ILD adjudicated to be drug-related in Enhertu group was 17.5%, with no grade 4 or 5 ILD observed. This indication has already been approved and launched in many countries and regions, including Japan, the US, and Europe.

These results reconfirmed Enhertu's consistent, sustained efficacy and long-term safety, and substantiated its contribution to improving a survival. Next, please.

This slide summarizes updates toward expanding indications for Enhertu. Enhertu is making steady progress in expanding indications in various countries and regions centered around breast cancer.

In December last year, based on the results of DB-05 for post-neoadjuvant therapy for HER2-positive breast cancer with high recurrence risk, it received Breakthrough Therapy designation in the US. Also in December, based on the results of DB-06, approval was obtained in China for the indication of chemotherapy-naive, hormone receptor-positive, and HER2-low or HER2-ultralow breast cancer.

This month, based on the results of DG-04, approval was obtained in China for the indication of second and later-line treatments for HER2-positive gastric cancer. Previously in China, third-line treatment for HER2-positive gastric cancer had conditional approval.

With this approval, full approval has been obtained for second and later-line treatment. Next, please.

This slide shows the progress of each Enhertu study. Aiming to contribute to more HER2-expressing cancers, we started DESTINY-Lung06 in October last year, targeting first-line treatment of HER2-overexpressing non-squamous NSCLC.

In December last year, we started the randomized phase of DESTINY-Ovarian01, targeting first-line maintenance therapy for HER2-expressing ovarian cancer, and DESTINY-Endometrial02, evaluating adjuvant therapy for HER2-expressing endometrial cancer. Next slide, please.

From here, this is the progress of Datroway. Data from the TROPION-Breast02 trial targeting TNBC not eligible for PD-1/PD-L1 inhibitor treatment was presented at ESMO in October last year.

Based on this data, filings for approval were submitted in Europe and China and were accepted in December last year. Procedures toward filing are also progressing in other countries and regions.

For TNBC, as shown in the table on the left, in addition to the TB-02, three phase 3 studies are ongoing in early-stage and recurrent metastatic stage. Next, please.

This slide introduces new phase 3 trial. The TROPION-Lung17 trial compares Datroway monotherapy with docetaxel in patients with non-squamous NSCLC in second-line or later setting.

Building on insights from prior studies such as TROPION-Lung01, we target at patients with TROP2 NMR biomarker-positive. This trial aims to expand the treatment opportunity for Datroway monotherapy in NSCLC.

Next slide. This slide introduces the latest status of the ongoing Datroway trials.

The first is the TROPION-Lung07 trial, which targets first-line treatment for non-squamous NSCLC with PD-L1 expression below 50%. This trial had not previously applied the TROP2 NMR biomarker, but following a protocol amendment, PFS and OS in the TROP2 NMR-positive population were newly added as primary endpoint.

The second is the TROPION-Lung12 study. This is an adjuvant therapy trial for stage 1 NSCLC with ctDNA-positive or high-risk pathological features evaluating a combination therapy with rilvegostomig.

Regarding this trial, due to complexity of study operation, we've decided to discontinue patient recruitment. No new safety concerns were identified, and there is no impact on other Datroway trials.

Next slide, please. From here onward, I would like to talk about the progress of next wave.

For Ezarmia, we are preparing a phase 1 trial combining darolutamide with Ezarmia for mCPRC. Regarding DS-9606, a modified PBD-ADC targeting claudin-6, we've decided to discontinue its in-house development following a strategic portfolio review.

Meanwhile, DS-3610, a STING agonist ADC introduced at last year's Science & Technology Day, commenced its first-in-human trial in November last year. This slide shows that Ezarmia received Prime Minister's Award.

Ezarmia was approved in Japan 2022 for the treatment of relapsed refractory adult T-cell leukemia-lymphoma, and in 2024 for relapsed or refractory peripheral T-cell lymphoma. Japan was the first in the world to obtain approval.

This time, in recognition of healthcare contribution through establishing a new cancer therapy targeting EZH1/2 epigenetic regulation, we've received the Prime Minister's Award at the 8th Japan Medical Research and Development Awards following Enhertu's award at the 6th ceremony. We are extremely pleased that a drug independently developed by Daiichi Sankyo is contributing to patient treatment, and that its achievement has been recognized by the society.

Finally, a news flow from now onward. Regarding upcoming regulatory decisions, we anticipate a review result for DESTINY-Breast11 trial from the US FDA in the first half of next fiscal year.

As for the upcoming key data readouts: for the DESTINY-Lung04 trial of Enhertu for the first-line therapy of HER2-mutated NSCLC, data is expected in the first half of next fiscal year. For the TROPION-Lung07 and Lung08 trials of Datroway for first-line of NSCLC, data is expected in the second half of next fiscal year.

Furthermore, AVANZAR trial data is now expected in the second half of calendar year 2026. Additionally, data from TROPION-Lung15 trial, which targets EGFR-mutated NSCLC after osimertinib, is still expected in the next fiscal year as previously planned.

Slide 29 and onward are appendix. Please take a look at those slides later.

That's all from myself.

Can you hear me? Thank you.

[unclear] the sound.

The sound is back now to the translation line. Sorry, we missed the question from Yamaguchi-san.

Regarding 9606, we stated that our in-house development will be discontinued. As we proceeded in our development, we had the result, and regarding MPBD, itself, its utility was confirmed.

Then how should we do moving forward?

We may have an option taking partnership with other companies who may be interested in out-licensing of this asset, but the in-house development will be discontinued. Therefore, regarding MPBD technology, its usefulness has been confirmed.

Therefore, the subsequent researches are ongoing. Therefore, changing the targets, the clinical programs will continue.

That is our policy. Thank you.

Thank you. I'm sorry, but including the competition for claudin, regarding 9606, given the strategic value, you decided not to do it on your own, is that right?

In germ cell tumor, we had a positive result. There is a room of making more development in that area.

Given the portfolio perspective, we decided not to continue the in-house development in this field.

I see. Thank you.

Another question is Enhertu marketing, first-line starting from December. Promotion started, and I'm sure if it's already appearing quantitatively in the numbers, but what is your feeling in the market?

DB-09 marketing promotional activities, how effective and the activities are producing the results?

Thank you for your question. Regarding DB-09 current status, Ken Keller is going to give you a comment, please.

Yes, thank you very much for the question. DESTINY-Breast09, which is the first-line, HER2-positive metastatic breast cancer indication, it's been launched in the US.

The team is now educating our oncology customers in the US. The data, as is really outstanding.

It's being received very, very well. I would expect the adoption to be very, very quick.

At this point, the oncology community knows Enhertu very well. They're comfortable with it, and with this data, I think they will embrace it very quickly.

Do you have some sense of penetration rate as of today, or it's too early to say?

It is too early to say what it is. We just launched it really just a little while ago, and so we'll be able to provide you with more information in about a quarter from now.

Thank you very much. That's all.

Yes, this is Hashiguchi speaking. My first question is related to Enhertu Japan, Europe sales situation.

This time you have made a downward revision of your forecast slightly compared to the original forecast. What is going differently?

What is the background for you to take your forecast downward? Can you explain about the reason and background for that?

Yes, I would like to make one comment first, and then I would like to ask Ken Keller to make some additional comments. In Europe, we are seeing some adjustment.

When we look at the quarter-on-quarter situation in Europe, there has been a change to the ERP system. As a result, we had to do some shipment in the second quarter, and that was affecting the quarterly sales.

I would like to ask Ken Keller to comment on the situation in Europe and sales from full-year sales perspective.

Thank you very much. When we look at Enhertu in Europe, we're in a situation where all the countries have launched the HER2-positive second-line metastatic breast cancer indication, and the market share, the penetration, has already achieved a very, very high level.

We see continued growth in that setting. Now, as we look forward, we're going to see substantial growth in Europe as the different countries obtain access for the HER2-low indication.

We've got the HER2-low indication in most countries in Europe, but now we're working through the typical reimbursement approval. As these occur, you'll see an acceleration of growth in Europe.

Thank you so much. For Japan, what's the situation in Japan?

Yes, let me respond to that question regarding Japan. Last year in April, we have seen some impact, NHI drug price revision.

Just before the start timing in April, we had seen some last-minute demand, and that impact still lingered. Overall, Enhertu future growth trajectory in Japan remains unchanged.

Thank you very much. Next, Datroway NSCLC phase 3 trial progress, that's what I would like to understand.

AVANZAR study was changed from the first half to the second half in terms of the timing, and for TL07, your disclosure was always saying that FY2026, but AstraZeneca is saying first half of the calendar year. In your fiscal year, latter half, you've made a timing change to the latter half of your fiscal year.

What is the reason behind this timing change?

Thank you very much, Mr. Hashiguchi.

First, regarding AVANZAR, enrollment has been complete, and with the incidence of event, we understand that there has been change made, and that's all we know. For TL07, 08, we've disclosed second half of this fiscal year, it's still being in line with our initial plan.

Thank you. Regarding 07, primary endpoint was added this time, and so when you get the overall primary endpoint data, I guess you're going to make a disclosure.

Is that the case, or if you can collect the data only in already-set endpoint, are you going to disclose those endpoint first, or all of them all together?

Thank you very much for your question. Regarding 07, NMR biomarker has been added to primary endpoint as we have explained.

Next year, second half, a PFS data is expected to be disclosed. Whenever we have event, we are going to make a disclosure.

As we've experienced at AVANZAR, when event becomes long or takes longer, then the timing of the disclosure may come later. When that happens, we are going to communicate to you.

This time's protocol amendment, with regard to that, we've had a lot of sufficient discussion, and what's more important here is that we are going to get the positive study results. We do our best, and we continue this study.

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

This is Sakai, UBS. Thank you for your presentations.

My first question is about the follow-up question of TL07. There are four primary endpoints now, is that right?

Then what is the hierarchy of the statistical analysis, and how should we consider the alpha? TL08 and 10, don't you have to change their primary endpoints?

Thank you for your questions. Whether or not in total there are four endpoints in ITT and in AMR-positive population, PFS and OS will be evaluated as primary endpoints.

As a result, how will be leading to defining, we will consider risks and the benefits, taking a look at the study results, and make a strategy for filing. Therefore, at this point in time, which is going to be included or not, I may have to expect that anything is not yet definite.

Therefore, I'd like to reserve my comment this time. Based upon data, we will proceed our filing.

What about the 08 and 07?

Regarding TL08, we are also having discussion, and we are currently considering to include NMR as of today. If we decide and added this change, then we will also let you know.

Concerning TL10, we don't have any idea at the moment to make such an aggressive change.

Thank you. Second question is the inventory write-down on the balance sheet.

I think it was towards the end of the year, and it increased remarkably. What are the items contributed to that increase?

Like the past case, don't we have to worry about any potential write-off of inventories?

Thank you for your question. At this point in time, there's no potential impairment we anticipate.

That's one point. For Enhertu and Datroway, overall, they are accelerating the growth globally, and especially the stocktakings are accumulating in the US for the purpose of growth, and that is affecting most.

That's all. Thank you.

Hello, I am Mamegano from BofA Securities. I would like to make one clarification on I-DXd phase 3 trial received clinical hold, but I heard that this clinical study was reconvened, recommenced.

Is that the case? For this, I think it was a trial to support the filing.

Can you tell me whether you've submitted the filing already or not?

Yes, thank you very much for your question. Sorry that we've concerned you.

I-DXd, we've received partial clinical hold, and it's been lifted already. However, I would like to explain the current situation.

Ideate-Lung02 study may have ILD serious cases, and our R&D team came to realize that, and we stopped the patient recruitment, and we made a report to the FDA. Then FDA has issued partial clinical hold, and that's been already lifted.

In the meantime, ourselves and Merck decided to have more strict risk management for ILD. ILD high-risk patients are now excluded from the trial, and we have more strict inclusion criteria.

Independent data monitoring data is looking at the safety and efficacy data more frequently. On top of that, participating investigators and clinical site staff are receiving additional education and updated training.

Amendment of protocol, ILD symptoms, and ILD management are now more thoroughly implemented. With those, partial clinical hold's been lifted.

For Ideate-01 study submission, what is the impact on the filing?

There is no impact on such filing, we are having a discussion with the regulatory authorities in different countries and regions, and we stick to the original timeline.

That's all. Thank you.

One more question. You're going to announce MTP, Midterm Business Plan, in April, and with regard to Datroway, I'm sure this is a growth driver for you.

Now you have AVANZAR trial, and in the second half, you're going to have top-line result. In Midterm Business Plan, Datroway's assumption, how should we expect Datroway's assumption to be laid out in the MTP?

Thank you very much for your question. We would like to make a detailed presentation on MTP when we make an announcement, I can't make detailed comment at this point of time.

Datroway study result, such as AVANZAR study result and the others, will make a big difference in coming five years business. When we make announcement of MTP, we will explain about the assumptions and scenario on which MTP's been formulated.

We would like to offer you as much explanation as possible.

Yes, thank you very much.

This is Ueda, Goldman Sachs. Thank you.

I have a question about clinical trials of Datroway. This time, TROPION-Lung07, QCS biomarkers were used.

As a result, enrollment increased in terms of number of patients, and did it affect to the data announcement timing, or do you think that you still need to review all those? Also for 08 study, biomarker usage is now under review.

If you decided to use it, then should we anticipate that the timing of announcement will be changing?

Thank you for your question. Regarding the timing, this time the enrolled patients numbers have been increased, and already we completed enrollment.

Therefore, there's no delay anticipated. It's already complete.

As we experienced with AVANZAR, if any events happen and causing any delay, we will let you know. For the enrollment of the patients, compared to the original plan, we added on NMR, and we have already completed the enrollment.

Did I answer to your question?

Yes, thank you. Is it the same situation for 08?

Regarding 08, as of today, I'm sorry I cannot comment in details, but similar strategy is taken to move forward.

I understood. Thank you.

My second question is about Enhertu indication expansion impact. First, in the first-line treatment, as you expand indication more, I think the sales will be accelerated.

Already in the US, DB-09 positive results has been disclosed, and as a result, do you see already some positive impact in the clinical practice, or can we expect more acceleration of the sales expansion? DB-05 and 11, those approvals are also expected.

Number of the patients seems to be big, but given the number of cycles of treatment, I may consider 09 contribution may be big, or if the target population expands and if the clinical practices are conducted more efficiently, then there will be also a major contribution expected from 11's result. Which way do you consider?

For this question, Ken Keller will answer to your question.

If I heard the question correctly, we're already seeing some spontaneous use in DESTINY-Breast09 from almost the moment when that data became public. We are seeing people adopting it and using it already, even though commercially we've launched this just a little while ago.

As we project out to the early-stage breast cancer settings of DESTINY-Breast11 and 05, in these early settings, the goal is cure. Both of these studies provide standard-of-care-changing new data.

I expect them, and everything we're hearing from the community, is that it will be embraced very, very quickly. Did that answer your question?

Yes, I understood. Thank you very much.

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

Hello, this is Wakao from JPMorgan. My first question is as follows: this time you didn't have temporary expense, but wasn't there any special factor?

Then for the CMO compensation fee, I thought that there is something which is still under negotiation. What's the status right now?

Temporary expense that we disclose, and on top of that, is there anything else? The answer is no.

Going forward, with regard to the CMO compensation fee, if we scrutinize the situation and when some things comes up, we are going to disclose. At this point of time, we haven't identified any outstanding remaining compensation fee that we need to pay to CMO.

When are we going to see the conclusion of this?

We are having an ongoing discussion with CMO, and we cannot determine when is the expected timing of the conclusion of this negotiation.

TL07 and 08, you are now adding NMR biomarker. Can you explain about the background why you've decided to do so?

I understand that you're trying to improve the probability of success. If you are confident in the result of Datroway, I don't think it was necessary.

What's the reason behind?

Thank you very much for your question. We've had a lot of internal discussion on that, and at one point of time, we thought that this biomarker is not necessary.

Pembrolizumab and Dato-DXd, as we have experienced in breast cancer, these two are good match. In lung cancer, patients are hetero as based on our experience.

NMR biomarker in lung cancer is very critical. That's one of the reason.

Although you haven't asked this, but TL17 NMR biomarker study is going to take place. In the area of lung cancer, with the existence of biomarker, we can offer better benefit to the patients.

In 07, 08, by using biomarker, we can enhance the probability of success. That's why we've decided to add biomarker in the protocol.

That's all from me. Thank you.

I understand that you've discussed with FDA on this. For NMR-positive population, if you meet endpoint, I would understand that you can successfully make submission.

Of course, depending on the data, but I think you can get approval from FDA?

Yes, we've consulted with FDA before we amended the protocol. It all depends on how good our clinical trial result is.

Thank you very much. MTP is to be announced in April.

The other day in the JPMorgan Healthcare Conference, CEO mentioned regarding the profit outlook into five years. In five years from now, you have a sales milestone for Enhertu, and you have cliff with Lixiana.

The profit somewhat may decline. However, if things go well, you can make some growth,

and I think that's the outline of the message of you. Can you explain about that once again?

With regard to the next MTP to be announced in April, I am very sorry, but we cannot offer you any detailed comment because we are having an ongoing discussion to formulate MTP. Lixiana LOE, Injectafer being impacted by generic, you understand those things quite well.

Those would be the downside factor, negative factors. With 5 ADC growth, we are hoping to catch up or compensate those decline as much as possible.

That's all I can tell you for now. We are still committed to improve profitability, and that's the baseline for the next MTP.

Understood. Thank you very much.

Thank you. I'm Muraoka from Morgan Stanley.

I have a follow-up question of Wakao-san's conference-related item. I'd like to understand the wording exactly.

Did you say decline or slight decline? I think it depends on how much inclusion you assumed.

If you included Dato conservatively, is it a decline or slight decline? Could you share that part once again with us?

Thank you. In terms of wording, the word we used is slight decline.

Overcoming the factors against the profit, we will be putting ourselves back on track for growth. In that context, this wording was used.

How much, I'm sorry, we cannot talk about it specifically. At any rate, there'll be some directions, negative direction putting us downside, but would like to recover from that as much as possible.

Also those measures will be incorporated in our five-year business plan. If it is a slight decline, then I think natural thinking you should be able to achieve a V-shape recovery after that.

Thank you very much. Another question is smuggling point.

Are you going to make acquisition by the time of next five-year business plan, and how many deals at what scale?

Excuse me. What you're asking about is to acquire external assets?

Yes, thank you.

At this point in time, we don't have anything that we can talk about. Again, in our five-year business plan, we look at our pipeline, especially in early-stage pipelines.

If there anything which we can expect working as a complementary, we'd like to pursue toward the growth during the five-year business plan and beyond. We'd like to explore externally any good candidates of assets.

That strategy is unchanged. Before the announcement of April, the announcement of the five-year business plan, nothing is now moving at the moment in this regard.

Thank you very much. Just one more point.

Actually your stock price went down much, but it came back quite quickly. Did you conduct a share buyback?

It was a sharp decline and recovery. I think probably in the next week, you will disclose whether you conducted the share buyback or not.

Could you comment? Regarding a share buyback, as we have been talking about it,

we will take into the stock price and others, and we make comprehensive review and make a decision. Far, on a monthly basis, we have the timely disclosure in the first operating day, and on that timing, we will continue disclosing the information.

Thank you very much. I wish for you also pay attention to your company's stock price.

Thank you.

Thank you very much. Regarding TL07 and 08, I have question.

NMR biomarker is now added in the primary endpoint, and I think this is a good news. Regarding this, I have two questions.

07 regarding 07, 08, it was a combination with Keytruda, and you use NMR to, and then this will increase the probability of success. I think it will have a big commercial impact because you can combine with standard of care, Keytruda.

07, 08, for those two studies, I think you are done with the patient recruitment, and within 12 months, the result will be presented. You have come to this end, now you are making amendment.

You've got the kind of a consensus from the FDA, does that mean that FDA understands the significance of NMR as a biomarker?

Thank you very much. In terms of the marketability, I would like to ask Ken Keller to make some comment.

I would like to respond to your second part of your question, how FDA sees the significance of NMR. This relates to the discussion of contents of FDA, I can't make any comment.

By including biomarker, our intention is to improve the probability of success of this trial. That was the main intention, and please allow me to repeat that point once again.

Depending on the result, study result, we will consult with FDA and figure out how we want to do with the filing.

The question in terms of adding in and working with a standard of care, you are absolutely correct. Keytruda is clearly the market leader, and we've got a number of first-line non-small cell lung cancer studies with Keytruda, and also to remind you we've got the AVANZAR study with Imfinzi, which is AstraZeneca's IO drug.

We feel that whatever the preference is of that specific oncologist, we're adding Datroway in a way that is very convenient, and it should lead to very quick confidence in our drug adding to whatever they prefer.

Thank you so much. Next, regarding MTP, regarding healthcare conference hosted by JPMorgan, I know you are announcing MTP in April, you can't talk much about it now.

Slight decline, as you say, with regard to profit, it's not margin? Are you talking about absolute amount, is that correct, not margin?

Also when profit declines, the driver behind is, I guess, the aggressive R&D cost assumption. In your case, 5 ADC has many trials, and you have partners.

With regard to the R&D cost, I would assume that with AstraZeneca, Merck, you've already, I guess, made alignment on the cost. I don't think you alone cannot make adjustment or changes by yourself, correct?

With regard to the future R&D spending, splitting R&D cost between us and the partner has been determined, we stick to that. Which study is to be led by who is different in different trial.

When we've made agreement, and then we just stick to the cost-split structure we've predetermined with the partner. During the MTP period, how are we going to control R&D cost?

I think that's what you wanted to understand. To that end, we have trials where we work with partners, and we have developments that we take care of all by ourselves.

In coming five years, which project are we going to prioritize? That project prioritization and resource allocation needs to be well-managed.

I have a follow-up question. In next three years, for in next three years, not five years, am I correct to understand that you've already had a lot of discussion with your partners as to what kind of trials are going to take place for what product?

Yes, depending on the product, we are in a different stage, and for each product, we have formulated joint team. Rest assured, we have sufficient discussion going on between us and our partner through the joint team, and we stick to the priority that we decide on.

Hi, can you guys hear me? Yes.

Thank you for the opportunity to ask a couple of questions. I want to go back to your claudin-6 ADC, the decision to discontinue DS-9606.

My question is about the construct of the modified PBD construct. You mentioned its clinical utility has by now been established.

Because I also noticed your peer company Chugai also discontinued a claudin-6 T-cell engager in October. Can I confirm that it might be an issue with the target of claudin-6?

Can you also give us about the toxicity of the modified PDB construct? That's my first question.

Thank you.

Thank you for your question. Regarding MPBD, in terms of technology, yes, we confirmed that technology utility, as I mentioned earlier.

The reason we selected claudin-6, there are several reasons. Therefore, we expected in this asset, but there are things that turned out as it's expected or unexpected.

In terms of science contents, we will be discussing it in some medical conferences, allow me not to touch upon those. In terms of utility, in the germ cell tumors, if we can confirm the efficacy, then technology-wise, it should be very good.

For that point, we could confirm. Also side effect was manageable as well.

Therefore, amongst the difficult challenging technology of PBD, we believe that our technology utility level is high. Talking about claudin-6 in germ cell tumors, can't it be developed for this particular type of tumor?

I think it is possible. Therefore, any companies interested in this may consider development, including in-licensing.

What about the business viabilities or in terms of portfolio? Given our business portfolio overall, we decided to discontinue.

That is a background reason. Did I answer to your question?

Yes, yeah, answered very well. Thank you.

I was mostly concerned about the toxicity. My second and the last question is about your CapEx plan.

Nikkei Asia reported that you guys were considering spending ¥300 billion, that is close to $2 billion on CapEx, right, in four different countries: Germany, Japan, US, and China. This obviously feels pretty big in relation to the ¥800 billion in CapEx you guys already disclosed in the last five-year plan.

Can I confirm that this ¥300 billion is above and beyond the ¥800 billion already committed?

Thank you for your question about our CapEx. It is not a new additional investment, what we announced is as we have been explaining so far, within the range that we have been already talking about, this spending will be incurred.

Therefore, there is nothing new, nothing additional to the CapEx that we have already announced.

It is part of the ¥800 billion already announced.

Yes, sorry, I am not familiar with the article's detailed contents, but yes, your understanding is correct.

Very good, yeah. Thank you very much.