Takeda Pharmaceutical Co. Ltd. · TSE:4502
Takeda Pharmaceutical — Debt Investor Presentation (November 2018)
49 slides from Takeda Pharmaceutical's debt investor presentation, Nov 14, 2018
Slide 1: Debt Investor Presentation
Debt Investor Presentation November 2018 Updated as of Nov 14
Slide 2: Important Notice
Important Notice This document has been prepared solely for the purpose of presenting relevant information regarding Takeda Pharmaceutical Company Limited (“Takeda”), including its proposed acquisition (the “Shire Acquisition”) of Shire plc (“Shire”). This document does not constitute an offer to se
Slide 3: Offering summary
Offering summary Indicative terms and conditions Issuer Takeda Pharmaceutical Company Limited Security type Senior Unsecured Notes Offering Size EUR Benchmark Format 144A/Regulation S for life Expected ratings Moody’s A2 / S&P A- (Both Neg Watch) Tenors 2-year FXD/FRN, 4-year FXD/FRN, 8-year FXD, 12
Slide 4: Acquisition of Shire – Key transaction terms and take-out financing
Acquisition of Shire – Key transaction terms and take-out financing Key transaction terms1 Take-out financing (as of Nov. 8, 2018) • Agreement to acquire Shire for an implied value of £46bn2 ($62bn) • Shire shareholders entitled to receive, per Shire share: USD /EUR $7.5bn eqv. Term Loan – $30.33 ca
Slide 5: Pro-forma capitalization and maturity ladder
Pro-forma capitalization and maturity ladder Pro-forma capitalization1 Pro-forma maturity ladder of existing bonds6 As of March 31, 2018 (JPYbn) (USDmm) JPYbn USDmm 600 Existing Shire Bond Existing Takeda Bond 4,800 Cash and cash eqv.2 476.9 4,225 ¥434bn ¥429bn 500 $3,848mm $3,800mm Existing bonds 2
Slide 6: Preserving balance sheet strength and financial flexibility
Preserving balance sheet strength and financial flexibility • Commitment to maintaining investment grade credit ratings • Significant combined cash flows to de-lever quickly • Capital enhancement by hybrid finance to improve credit profile • Target net debt to adjusted EBITDA ratio of 2.0x within th
Slide 7: Takeda / Shire at a glance
Takeda / Shire at a glance No.1 Japanese pharmaceutical player Leading biopharma in rare diseases Takeda is a R&D driven global pharmaceutical company with the Shire is a rare diseases-focused leader committed to highest global Rx sales among Japanese pharmaceutical companies1 differentiated and hig
Slide 8: Key post-closing combined company highlights
Key post-closing combined company highlights A global, values-based, R&D-driven biopharmaceutical leader Our foundation headquartered in Japan Focus Robust presence in core therapeutic areas Diversification Attractive geographic footprint aligned with market opportunities Growth Recently launched in
Slide 9: A global, values-based, R&D-driven biopharmaceutical leader headquartered in Japan
A global, values-based, R&D-driven biopharmaceutical leader headquartered in Japan 9
Slide 10: The combined company: A global, values-based, R&D-driven biopharmaceutical leader
Our foundation The combined company: A global, values-based, R&D-driven biopharmaceutical leader Key Growth Products • Ninlaro • Trintellix • Entyvio • Adcetris • Alunbrig • Takecab Revenue¹ ¥1,771bn ¥1,703bn • Vyvanse • Takhzyro • Immunoglobulin $15.8bn $15.2bn therapies 2 2 Expected further growth
Slide 11: Robust presence in core therapeutic areas
Robust presence in core therapeutic areas 11
Slide 12: Focus: approx. 75% of total sales concentrated in five areas
Focus Approx. 75% of total sales concentrated in five areas post acquisition1 Products with over JPY 50bn+ in sales: Takeda Shire Blockbuster drugs3: RARE DISEASES PLASMA OTHERS ONCOLOGY GI NEUROSCIENCE LYSOSOMAL DERIVED (example of STORAGE HAE2 HEMATOLOGY THERAPIES key products) DISORDERS TAKEDA PR
Slide 13: Attractive geographic footprint aligned with market opportunities
Attractive geographic footprint aligned with market opportunities 13
Slide 14: Attractive geographic footprint aligned with market opportunities
Diversification Attractive geographic footprint aligned with market opportunities Global prescription drug market by region (2017)1 Geographic breakdown of Takeda + Shire (2017)2 U.S. RoW 21% 40% U.S. Europe & U.S. 34% International Canada 34% 64% Total Sales 18% China 2017 Emerging ¥1,771bn ¥1,703b
Slide 15: Recently launched innovative drugs drive cash generation and growth
Recently launched innovative drugs drive cash generation and growth 15
Slide 16: Key growth products drive cash generation
Growth Key growth products drive cash generation Therapeutic First launch in key region Product sales Area Product Key indications US JPN EU FY20161 FY20171 YoY ¥29.4bn ¥46.4bn Oncology Multiple Myeloma 2015 2017 2016 58.1% /$262mm / $413mm Non-small cell lung Not yet ¥2.8bn 2017 - - N/A cancer laun
Slide 17: Strengthened pipeline and expanded R&D capacity leveraging Boston and Shonan R&D hubs
Strengthened pipeline and expanded R&D capacity leveraging Boston and Shonan R&D hubs 17
Slide 18: Takeda + Shire complementary, robust and modality-diverse pipeline
Value-creation Takeda + Shire provides a complementary, robust and modality-diverse pipeline with an expected combined annual R&D spend of $4bn+1 Takeda Shire Orphan drug designation PHASE 1 PHASE 2 PHASE 3/FILED TAK-981 TAK-573 XMT-1522 sapanisertib TAK-659 relugolix pevonedistat ONCOLOGY TAK-164 T
Slide 19: Takeda achieved significant progress with 24 NME stage-ups
Value-creation Takeda achieved significant progress since FY2017 with 24 New Molecular Entity (NME) stage-ups Phase 1 Phase 2 Phase 3/Filed Approved1 TAK-573 XMT-1522 sapanisertib pevonedistat NINLARO® ADCETRIS® TAK-981 Teva Mersana Therapeutics Proteasome inhibitor Seattle Genetics Amyloidosis, ND
Slide 20: Takeda accelerates R&D utilizing collaborations and R&D hubs
Value-creation Takeda accelerates development of innovative R&D projects utilizing collaborations and its strong R&D hubs in Boston and Shonan c.180 active collaborations with external partners1 STRATEGIC FOCUS AREA DISCOVERY/ PRECLINICAL PHASE 1 PH2, PH3, FILED, LCM Hematology ONCOLOGY Lung Cancer
Slide 21: Significant margin expansion opportunities through cost-saving initiatives
Significant margin expansion opportunities through continuing cost-saving initiatives and further cost savings from integration 21
Slide 22: Takeda has a clear plan to generate value by realizing synergies
Value-creation Takeda has a clear plan to generate values by realizing synergies from Shire acquisition Takeda plans to achieve at least $1.4bn / ¥157bn p.a. in recurring cost synergies1 by the end of the third fiscal year following completion of the Shire acquisition COST SYNERGIES 53% 43% SG&A • S
Slide 23: Our Global Opex Initiative has achieved material margin expansion
Value-creation Our Global Opex Initiative has achieved material margin expansion Activities under Our Global Opex Initiative Adj. EBITDA margin expansion +3.8% 21.3% • Policy and • Price guideline rollout management complete 17.5% initiatives for Pay less Buy less • Significant all cost Procurement
Slide 24: Diligent financial management policy with a focus on maintaining investment grade credit rating
Diligent financial management policy with a focus on maintaining investment grade credit rating 24
Slide 25: Diligent financial management policy with a focus on maintaining investment grade credit rating
Discipline Diligent financial management policy with a focus on maintaining investment grade credit rating Generate & unlock cash Financial and capital allocation policies • Sustainable profit growth • Internal investment in R&D and • Reduce working capital product launches • Disposal of assets • Co
Slide 26: Our Commitment
Our Commitment 1 Maintain investment grade credit rating 2 Realize early deleveraging 3 Deliver synergies from the Shire acquisition 4 Generate strong cash flow 26
Slide 27: Appendix
Appendix 27 Takeda Pharmaceutical Company Limited
Slide 28: Transformation momentum is backed by Takeda's values and culture
Transformation momentum is backed by Takeda’s values and culture Value Driven: Takeda-ism • Patient → Trust → Reputation → Business Grow Portfolio Global, Agile and Committed to Innovation • Created global organization and capabilities • Driving patient-centricity and local empowerment Rebuild • The
Slide 29: Takeda: Agile, Global, R&D-driven, Headquartered in Japan
Takeda: Agile, Global, R&D-driven, Headquartered in Japan Key summary Revenue2 • Delivering on an ambitious company-wide and R&D-focused transformation Agile & R&D- • Growth through organic transformation and acquisitions ¥1,807bn Driven Transformation • Led by a highly experienced and diverse execu
Slide 30: Shire: Leading biopharma in Rare Diseases
Shire: Leading biopharma in Rare Diseases Key summary Revenue ¥1,703bn $15,161mm • Innovative, rare diseases-focused leader committed to differentiated and ¥1,281bn Rare Diseases high patient-impact medicines $11,397mm Leader • Biotech profile – majority of 2017 sales from rare diseases ¥721bn $6,41
Slide 31: Shire is the Right Transaction for Takeda
Shire is the Right Transaction for Takeda Global, values-based, R&D-driven biopharmaceutical leader headquartered in Japan Attractive geographic footprint and scale Inspires and enables people to collaborate and move Takeda forward, guided by Takeda’s values and unwavering patient focus Strengthens
Slide 32: Combined company in global pharmaceutical market
Combined company in global pharmaceutical market ¥5,095 (bn) $45.3 ¥4,705 ¥4,667 $41.9 $41.5 ¥3,974 ¥3,865 ¥3,829 $35.4 $34.4 8th $34.1 ¥3,221 ¥3,214 ¥3,117 $28.7 $28.6 $27.7 ¥2,883 Global Rx $25.7 sales 19th 21st Ranking ¥1,623 ¥1,590 (2017) 1 $14.4 $14.2 Combined Notes: 1 Source: EvaluatePharma® N
Slide 33: Progress since deal announcement
Progress since deal announcement 2018 2019 Announcement Closing May 8 July 9 August 8 September 11 October 26 January 8 2019 (or as soon as • Transaction • US FTC • Brazil • Chinese practicable thereafter) • $4.5bn announcement approval antitrust antitrust SSTL and JPY • Anticipated transaction clos
Slide 34: Experienced Board of Directors with a majority of external directors
Experienced Board of Directors with a majority of external directors Compensation committee C Compensation Committee Chair Internal directors Nomination committee Christophe Weber Masato Iwasaki Andrew Plump Representative Director Director, Director, Chief Medical President & CEO JPBU President & S
Slide 35: A global, diverse and experienced future leadership team
A global, diverse and experienced future leadership team CHRISTOPHE COSTA HARUHIKO HIRATE YOSHIHIRO PADMA MILANO FURUTA MWANA LUGOGO WEBER SAROUKOS Corporate NAKAGAWA THIRUVENGADAM Corporate Strategy Global Ethics & President & CEO Global Finance Communication & Global Legal Global Human Compliance
Slide 36: Takeda's Oncology business goals
Oncology GI Neuroscience Takeda’s Oncology business goals HEMATOLOGIC MALIGNANCIES OUR MISSION We endeavor to deliver novel medicines to patients with cancer worldwide through our commitment LUNG CANCER to science, breakthrough innovation and passion for improving the lives of patients. IMMUNO-ONCOL
Slide 37: An innovative pipeline enhanced with external partnerships in oncology
Oncology GI Neuroscience An innovative pipeline* enhanced with external partnerships in oncology Discovery/ Phase 1 Phase 2 Phase 3 Approved preclinical NINLARO ICLUSIG Pevonedistat Amyloidosis, ND MM, 2nd-Line TAK-659 HR-MDS/AML R/R MM dara combo, Chronic Lymphoma NEDD 8 R/R MM Ninlaro/dex,, Phase
Slide 38: Takeda's strategy expands the portfolio across core disease areas
Oncology GI Neuroscience Takeda’s strategy expands the portfolio across core disease areas supported by platform technologies IBD Celiac disease • Build upon success of Entyvio with new • Advance approaches for the formulations prevention • Expand treatment options with Alofisel of immune responses
Slide 39: Rich, diversified GI pipeline fueled by strong external partnerships
Oncology GI Neuroscience Takeda is executing on its strategy through a rich, diversified pipeline* fueled by strong external partnerships in GI Discovery/preclinical Phase 1 Phase 2 Phase 3 Approved Multiple targets in IBD ENTYVIO SC ENTYVIO Multiple targets Needle-free UC/CD JP, China Small molecul
Slide 40: Takeda has executed on the roadmap presented in 2016 for neuroscience
Oncology GI Neuroscience Takeda has executed on the roadmap presented in 2016 for neuroscience 2016 Roadmap KEY COMPONENTS OF ROADMAP • Differentiate TRINTELLIX • Advance early pipeline towards POC1 • Expand in neurology and CNS rare diseases through partnerships 1 POC: Proof of Concept 40
Slide 41: Building an innovative pipeline in neuroscience
Oncology GI Neuroscience Building an innovative pipeline* enhanced with external partnerships in neuroscience Progress since June 2016 Discovery/ Phase 1 Phase 2 Phase 3 Approved Preclinical1 TAK-653 TRINTELLIX AMPA PAM TESD sNDA (US) Depression Treatment Resistant Submitted Depression MDD (JP) Subm
Slide 42: Summary of historical Takeda balance sheet
Summary of historical Takeda balance sheet IFRS As of March 31 (Bn yen) Assets 2017 2018 Liabilities and Net Assets 2017 2018 Current assets 1,260.4 1,078.8 Current liabilities 1,366.3 737.5 Cash and cash equivalents 319.5 294.5 Bonds and loans 545.0 0.0 Trade notes and other receivables 423.4 420.2
Slide 43: Summary of historical Takeda results of operations
Summary of historical Takeda results of operations IFRS Full year ended March 31 (Bn yen) 2016 2017 2018 Revenue 1,807.4 1,732.1 1,770.5 % growth 1.7% (4.2%) 2.2% Research and development expenses (335.8) (312.3) (325.4) Operating Profit 130.8 155.9 241.8 % margin 7.2% 9.0% 13.7% Adjusted EBITDA1 35
Slide 44: Definition of Takeda's EBITDA / Adjusted EBITDA
Definition of Takeda’s EBITDA / Adjusted EBITDA We present EBITDA and Adjusted EBITDA because we believe that these measures are useful to investors as they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We further b
Slide 45: Reconciliation from net profit to EBITDA / Adjusted EBITDA of Takeda
Reconciliation from net profit to EBITDA / Adjusted EBITDA of Takeda Full year ended Mar 31 6 months ended Sep 30 (Bn yen) 2016 2017 2018 2017 2018 Net profit for the year 83.5 115.5 186.7 172.7 126.5 Income tax expenses 37.1 27.8 30.5 60.3 126.5 Depreciation and amortization 182.2 171.4 182.1 93.4
Slide 46: Reconciliation from U.S. GAAP Net income to Non GAAP EBITDA of Shire
Reconciliation from U.S. GAAP Net income to Non GAAP EBITDA of Shire This presentation contains the Non GAAP EBITDA of Shire, which is a financial measure not prepared in accordance with U.S. GAAP. Non GAAP measures exclude the effect of certain cash and non-cash items, which Shire's management beli
Slide 47: Pro forma organizational / parent guarantee structure
Pro forma organizational / parent guarantee structure: Takeda / Shire / Baxalta / SAIIDAC • Takeda currently expects to provide a parent guarantee over the Baxalta/SAIIDAC¹ bonds at or soon after the closing of the Shire Acquisition • Takeda expects that the Baxalta/SAIIDAC bonds will receive rating
Slide 48: Existing Baxalta/SAIIDAC bonds
Existing Baxalta/SAIIDAC bonds Next Call Amt Issued Amt O/S ISIN Name Currency Announce Maturity Coupon Moody's S&P Date ($mm) ($mm) US07177MAN39 Baxalta Inc USD 4/28/2016 6/23/2045 12/23/2044 5.250% 1,000 500 Baa3 *+ BBB- *+ US07177MAB90 Baxalta Inc USD 4/28/2016 6/23/2025 3/23/2025 4.000% 1,750 80
Slide 49: Abbreviations
Abbreviations ADC antibody drug conjugate LCM lifecycle management ADHD attention deficit hyperactivity disorder LSD1 Lysine specific demethylase 1 ALK anaplastic lymphoma kinase mAb monoclonal antibody ALM acute myeloid leukemia MDD major depressive disorder ALS amyotrophic lateral sclerosis MM mul
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