Astellas Pharma (Tokyo:4503) Q4 2025 Earnings Call

0:01 Thank you very much for your attendance in this twenty fiscal twenty twenty five earnings call by Astellas Inc. I am Kato, Chief Communications and IR Officer. I would like to serve as a moderator for today. Following our presentation today, we will move on to the Q and A session. The presentation will be based on the presentation materials available on our website. Simultaneous interpretation in Japanese and English will be provided throughout the event, including the Q and A session. Please note that we cannot guarantee the accuracy of it. You can select your preferred language from the menu at the top of the Zoom webinar screen.

0:57 If you select the original language, you will be able to listen to the audio in the original language without simultaneous interpretation. This is some note from us. This material, oral presentation and answers and statement in the Q and A session includes forward looking statements based on assumptions and beliefs in light of the information currently available to management and subject to significant risks and uncertainties. Actual financial results may differ materially depending on a number of factors. They contain information of pharmaceuticals including compounds under development, but this information is not intended to make any advertisements nor provide medical advice of any kind.

1:58 Now let me introduce you the participants from Astellas here today. Naoki Okamura, President and CEO Clinical Research and Development Officer, Tadaki Taniguchi Chief Commercial and Medical Affairs Officer, Klaus Seiler CFO, Atsushi Kitamura. So these four are attending in this meeting. Now I would like to start the presentation of Kamura's and the floor is yours. Hello, everyone. I'm Naoki Okamura from Astellas Pharma Inc. Thank you very much for joining our FY twenty twenty five financial results announcement meeting to a very busy schedule today.

2:49 This is a cautionary statement regarding forward looking information. As this was explained by Kato earlier, I'm not going to read this page. Page three is the agenda for today. First, I start with FY twenty twenty five financial results. On page four, I will give you an overview of FY twenty twenty five results. Revenue reached over 2,100,000,000,000 yen and core operating profit exceeded $550,000,000,000 yen both achieved record high results. Significant growth of Strategic Brands by over 140,000,000,000 yen year on year has driven double digit revenue growth. As for SG and A expenses, thanks to the robust progress of what we call SMT, Sustainable Margin Transformation, our company wide cost optimization initiative, SG and A ratio improved by 2.3 percentage points year on year.

3:46 Driven by strategic brands growth and robust cost management through SMT, core operating profit rose significantly, up by 42% year on year. Core operating profit margin increased by 5.5 percentage points year on year to reach 26%. Our pipeline also progressed substantially. PATCEV made a significant progress in MIBC muscle invasive bladder cancer development. Following POC achievement by City Day aggressive in PDAC, pancreatic ductal adenocarcinoma in FY 2024, a total of three POCs were achieved in FY 2025, namely City aggressive for NSCLC, ASP 2138 and ASP 7003And17.

4:36 For 30 aggressive, Phase III study was initiated for PDAC in the first line settings. Promising external assets, ASP five forty six and VIR 5,500 were licensed in and our pipeline expansion made progress. On Page five, I will explain FY twenty twenty five financial results. Across revenue, core operating profit and full operating profit, we broke records to hit all time high since the founding of Astellas. Let me explain main items. Revenue exceeded the 2,000,000,000,000 yen mark for the first time to reach 2,139,200,000,000 yen up by 11.9% year on year achieving the double digit growth for two consecutive years. Core operating profit substantially exceeded the 500,000,000,000 yen mark to reach 555,700,000,000 yen significantly increasing by 41.6% year on year.

5:33 The bottom half of this page shows full basis results. Operating profit was 382,600,000,000 yen and profit was 291,600,000,000 yen both rose significantly year on year. On page six, I will explain FY 2025 financial results of our main brands. Sales of all brands increased across the board with strategic brands sales combined strongly growing by over JPY 140,000,000,000 in total year on year. First, sales of five strategic brands namely PADCEV, Isovae, VYLOY, VYOZA and ZOSPATA reached $480,000,000,000 yen in total, substantially up by 143,900,000,000 yen or 43% year on year.

6:20 PATCEV and VYLO in particular drove the strong growth increasing by more than 50,000,000,000 yen respectively. Strategic brands have high profitability and their growth made a great contribution to the FY 2025 consolidated revenue and profit increase as a whole. Next, I will explain individual strategic brands and Xtandi. Padsav, sales increased to 221,200,000,000 yen up by 57,100,000,000 yen or 35% year on year. Global sales growth was driven by strong first line MUC penetration continuously. Sales expanded in all regions. In addition, early momentum for CIS ineligible MIBC approved in November last year in The United States also contributed greatly to sales expansion.

7:18 As for Isovey, sales rose to 77,600,000,000 up by 19,300,000,000 yen or 33% year on year. New patient starts, which are important metrics, steadily increased. In the recent fourth quarter between January and March, demand grew more than 10% quarter on quarter. Treatment rate for complement inhibitors as a whole including the competitor's product rose to about twenty percent. Market penetration made steady progress. With regards to VYLOI, sales reached JPY63.1 billion, substantially up by JPY50.9 billion year on year, significantly exceeding our initial expectations. Market penetration progressed extremely well across all regions, high cloning 18 testing rates contributed greatly to strong performance.

8:09 VIOSA and ZOSPARTUS sales rose steadily, respectively. Extended sales increased to 960,800,000,000 yen up by 48,500,000,000 yen or 5% year on year, reaching projected peak sales levels thirteen years after launch. Page seven is about cost items. With SMT initiative, we realized cost optimization of about 25,000,000,000 yen in FY 2025 for SG and A expenses, R and D expenditure and cost of sales combined. Partly due to the SMT effect, excluding U. S. Extended co promotion fees, SG and A cost ratio improved by 2.3 percentage points year on year. Let me explain a specific breakdown of SG and A costs and R and D expenditure.

8:59 SG and A expenses excluding ForEx impact rose by 2.6% year on year. While increased our revenue by more than 10%, we are able to manage SG and A expenses at a level almost similar to the previous year. Investment toward further growth of strategic brands was increased by about 10,000,000,000 yen year on year. On the other hand, as an SMT progress, we realized cost optimization of about 11,000,000,000 yen through steady progress in continuous global organizational restructuring, reduction of mature products related expenses and streamlining IT infrastructures, etcetera. As a result, while fully executing investments for strategic brands, we were able to offset the increase through SMT cost optimization according to assessment.

9:44 R and D expenditure excluding ForEx impact decreased by 3.8% year on year. While clinical development costs for our pipeline such as thirty day aggressive and ASP-five 46 C increased by about 5,000,000,000 yen we made progress in outsourcing cost reduction through insourcing development capabilities including clinical trials etcetera under SMT, which led to cost optimization of about 10,000,000,000 yen So we were able to fully offset the cost increase factors. In addition, with the completion of large clinical studies, development costs for strategic brands decreased by about 5,000,000,000 yen Page eight shows life cycle management of strategic brands. Let me explain main achievements in FY 2025.

10:32 Update since the last financial results announcement are shown in blue, including the achievements in April 2026. Strong development progress was made toward maximization of our strategic brands value notably for PADCEV. I've explained the latest status of PADCEV on the next page. Regarding VIOSA, in Phase II study in China, primary endpoint was met in April this year. Based on the study results, we are planning to file a submission in China. On Page nine, I will explain the latest status of PADCEV development in MIBC. In addition to development in the perioperative settings we have worked on so far, we also started development for bladder sparing MIBC to potentially maximize PATCEV's impact.

11:23 As for sis eligible MIBC shown on the left, we presented the latest data from EV-three zero four study at ASCO GU in February. As is shown in the figure, perioperative PATCEV and pembrolizumab significantly improved EFS event free survival, a primary endpoint compared to neo adjuvant chemotherapy. Also, OS overall survival and QCP, a PCR, pathological complete response, improved significantly as well. Based on the study results, we took procedures for an additional indication globally. Regulatory applications were accepted in Europe in March. In The United States in April this year, in U. S, we were granted priority review designation with PDUFA date set for the 08/17/2026.

12:20 Next, let me explain the right hand side, development for bladder sparing MiBC as an opportunity to further growth. It is known that about thirty percent of MiBC patients are ineligible for or refuse radical cystectomy or RC. These patients will not be eligible for EV-three zero three or EV-three zero four studies. There are high unmet medical needs for treatment option that delays or avoids RC and preserves the bladder. Based on the extremely favorable data obtained consistently from clinical studies in MIBC by now, we initiated development of PADCEV for bladder sparing MIBC.

13:07 EV-two zero nine is a single arm Phase II study initiated in April. The study enrolls MiBC patients who are eligible for, but select not to undergo RC to evaluate the efficacy and safety of PADCEV and pembrolizumab combination. PADCEV is administered in nine cycles, the same duration of treatment with MIBC studies so far. Primary endpoint are clinical complete response, CCR and bladder intact event free survival, BI EFS at two years. In addition, EV-three zero nine as a registrational Phase III study is under preparation in parallel. We are planning to start this study in the first half of FY twenty twenty six.

13:54 Also in China, regulatory application is under preparation based on EV-three zero three and EV-three zero four studies. Bladder sparing treatment and China are not factored in to our current peak sales forecast for PATCEV. So if successful, there can be further upside potential. On Page 10, regarding focus area approach, I will explain main achievements in FY 2025. Achievements made in April 2026 are also included in here. Over the past one year, our pipeline made a significant progress and expansion with three POCs achieved, one Phase III study initiated, three clinical entries and two promising external assets in licensed.

14:42 SB-two thousand 138 in immuno oncology achieved POC in gastric and GEJ, gastroesophageal junction adenocarcinoma preparation is now underway for rapid initiation of Phase III study. Furthermore, as a follow on program, we licensed in VIR-five thousand '5 100 from BER Biotechnology, ASP2998 made clinical entry to expand our portfolio. Ceti regressive in TPD targeted protein degradation achieved multiple important progresses. In PDAC where POC was achieved at the end of FY twenty twenty four, Phase III study was initiated in the first line settings. Furthermore, POC was achieved also in NSCLC Phase III study is now under preparation.

15:33 In addition, SB-five 834, a Pan KRAS degrader also made the clinical entry. Pipeline expansion is making steady progress. As for AT845 in genetic regulation, additional analysis is ongoing for POC judgment. ASP 2,957 also made the clinical entry. New programs including ASP 2998 in immuno oncology will be explained in detail on the next page. ASPE737 in blindness and regeneration achieved POC in patients with severe vision impairment due to GA, geographic atrophy. The next study plan is now under discussion with the regulatory authorities. Also, we licensed in ASP-five 46 from EvoPoint to further solidify our leadership position in the Clothing 18.2 space. On Page 11, I will explain new clinical programs.

16:29 Next generation innovative programs have advanced into clinical development. SB2998 is a program where which leverages a platform called Immunostimulatory ADC or iADC generated from joint research with Astellas. TROP-two directed monoclonal antibody is conjugated with two payloads cytotoxic topoisomerase one inhibitor and immunomodulator STING agonist. In nonclinical studies in mouse model, superior efficacy was demonstrated versus the existing TROP-two directed ADCs. From now on, efficacy and safety will be confirmed in human in clinical studies.

17:14 ASP-two thousand nine hundred fifty seven has been created as a gene therapy for XLMTM, X linked myotubular myopathy like AT 132. It uses a novel muscle targeted AAV capsid, high muscle specificity and reduced liver targeting was demonstrated in non clinical studies. This enables clinical study initiation at a dose level about 100 fold lower compared to AT132. With the progress of ASBE-two thousand nine hundred fifty seven, we decided on a strategic hold for AT132. Moving forward, we will focus on the development of ASP-two thousand nine hundred fifty seven as a gene therapy for XLMTM.

18:03 ASP-two 246 is a program to aim for recovery from motor dysfunction associated with ischemic stroke by using an approach called direct reprogramming. MESSENGER RNA encoding human neuro D1 is encapsulated in novel LNP lipid nanoparticles to enhance efficiency of delivery into cells. Messenger RNA encoding human neuro D1 promotes conversion of brain astrocytes into neurons and induces neuronal regeneration. In a non clinical study using the monkey model, improved motor dysfunction was demonstrated with intracerebral infusion of ASP-two thousand two hundred forty six. Phase onetwo study enrollment has been initiated by now. FSD first subject dose is anticipated for the first quarter of FY twenty twenty six. You can find no clinical study data of these programs summarized on Page 37 in the appendix, so please refer to it at your leisure.

19:01 From here, I will explain FY twenty twenty six outlook. On Page 13, I will explain an overview of FY twenty twenty six outlook. In FY twenty twenty six, our performance is forecasted to reach record high results. Revenue expected to expand over 2,200,000,000,000 yen driven by growth of strategic brands by over 130,000,000,000 year on year according to our forecast. Due to this significant growth, we're expecting revenue increase. Regarding cost items, we will continue SMT initiative to achieve about 40,000,000,000 yen cost optimization. SG and A ratio is expected to improve by 2.3 percentage points year on year. We plan to increase investment in R and D in line with the growing number of new Phase III trials.

19:49 Core OP is expected to increase by 12% to over 600,000,000,000 yen and the core OP margin is projected to rise to 27.9. In our pipeline, regarding Part C for MRBC, we plan to conduct multiple filings and regulatory decisions as well as initiate new Phase III trials. We also plan to initiate Phase trials for our CTD aggressive and ASP 2138. Regarding shareholder returns, we forecast dividend per share at 80 yen up 2 yen On page fourteen, fourteen, I will explain the full year focus for FY 2026. For FY 2026, we anticipate revenue of over 2,200,000,000,000 yen and core OP of over 600,000,000,000 yen surpassing the record high achieved in FY 2025.

20:40 First, for ForEx rates, we are assuming 150 yen to U. S. Dollar and 180 yen to euro for FY 2026. We forecast revenue of 220,000,000,000 yen an increase of 80,800,000,000 yen year on year. Although we anticipate a decline in sales of Xtandi, we expect to secure overall revenue growth driven by a strong performance of strategic brands. We forecast SG and A expenses of 800,000,000,000 yen down 60,300,000,000 yen year on year. Of this amount, extended co promotion expenses in The U. S. Are expected to decrease in line with the decline in its U. S. Sales. Excluding co promotion expenses, SG and A is projected to be $584,000,000,000 yen down 28,100,000,000 year on year. The cost optimization through SMT is estimated to about 40,000,000,000 yen The majority of this relates to SG and A optimization and is expected to contribute to the reduction in SG and A. R and D expenses are projected to be $355,000,000,000 yen up 42,200,000,000 yen year on year. This increase is primarily due to the higher clinical development costs, including initiation of Phase III studies.

21:52 To further solidify our mid- to long term growth, will accelerate investment in promising pipeline candidates such as ASP 2,138, ASP five thousand four and sixty and VIR 5,500 in addition to the lifecycle management of BASF and BILOY. As development progress, we expect to continue investing at this level or higher. As a result, the focus is core OP of six twenty billion yen up 64,300,000,000 yen year on year, representing double digit growth of 12%. We anticipate that growth in Strategic Brands and cost optimization through SMT will contribute significantly to this profit increase. We expect the core operating margin to be 27.9, up two percentage points year on year.

22:39 Next is full basis operating profit. As a major adjustment item excluded from the core basis, we anticipate amortization of intangible assets of about 140,000,000,000 yen Additionally, we have factored in about 80,000,000,000 yen in other expenses. This includes impairment loss risks of about 40,000,000,000 yen and costs associated with organizational restructuring. As a result, we focused operating profit of $395,000,000,000 yen and a increase of 12,400,000,000 yen year on year. Page 15, the explanation the outlook for our main brands of FY 2026. The strategic brands will continue to drive growth in consolidated revenue and profit with the particular contributions expected from Patricep, Isovae and Byloi. We anticipate double digit growth for each of these brands with total sales expected to exceed the 600,000,000,000 yen mark and reaching $610,000,000,000 yen yet on an increase of about 130,000,000,000 yen or 27%.

23:39 BudgetSaf, we expect continued strong growth driven by further market penetration of first line MUC. In particular, we anticipate growth in EU where reimbursement progressing. In The U. S, in addition to the full year contribution from cisplatin ineligible MRBC, we anticipate sales contributions from the cisplatin eligible MRBC indication for which the filing was recently accepted starting during the current fiscal year. Azerbai is expected to see steady sales growth building on the sales infrastructure expanded last fiscal year. We will further strengthen promotional activities and through DTC initiatives, we will aim to expand the complement inhibitor market and increase the number of new patients. By the way, we anticipate a continued solid growth across all regions driven by a further increase in testing rates and expansion of the patient base and market share. We expect steady growth for both VIOSA and ZOLSPARA.

24:37 Extended, the negative impact of price reduction associated with IRA, which takes effect in January 27 in The U. S, is expected to become apparent starting in the fourth quarter. In addition, combined with the impact of patent expiration in certain countries, global sales are expected to decrease by about 50,000,000,000 yen year on year. Please note that starting in fiscal year twenty twenty six, we have discontinued the disclosure of sales forecast for individual products. We believe it is important to grow our five strategic brands as one whole and we hope to engage in dialogue focused on third mid- to long term growth trajectory trajectory rather than being preoccupied with the short term fluctuations in individual products. Regarding Astellas and Mirabegron, we anticipate that they will be significantly affected by external factors such as patent situations in the future. So as exception, we are disclosing their sales forecast for your better understanding of our assumptions and outlook.

25:36 Going forward, through timely and appropriate information disclosure and communication, we will continue to strive to enhance our mid- to long term corporate value by engaging constructive dialogue with investors. Page 16, about the life cycle management of the strategic brands, I will explain the major events expected in FY 2026. We are expecting multiple regulatory events across strategic brands. For BASF, we expect regulatory decisions on The EU and Japanese filing based on the AB303 study for cisplatin ineligible MIBs in the first and second halves of the fiscal year, respectively. In addition, expect a Japanese filing based on the EV-three zero four study for cisplatin eligible MRBs in the first quarter with regulatory decisions for The U. S. And EU submissions anticipated in the second quarter and the second half of the fiscal respectively.

26:27 Furthermore, plan to file in China based on both the EV-three zero three and three zero four studies in the first quarter. We also plan to initiate the Phase III EV-three zero nine study for blood sparing therapy in the first half of of the fiscal year. As of it, we plan to file in China in the first quarter. There are currently no approved treatments in China for geographic atrophy and serious condition. And following constructive discussions with the authorities, we plan to file based on data from overseas clinical trials. VIOSA, we expect study data readout from the STARLIGHT III trial, which evaluates long term safety in Japanese women, to become available in the first quarter, and we plan to file in Japan in the second quarter based on those results. Results. We also plan to file in China in the third quarter.

27:14 On Page 17, this is an outline of the key pipeline events expected in FY twenty twenty six. We plan to initiate Phase III trials for SB2138 in first line gastric cancer and for aggressive in second line or later non small cell lung cancer in the first half of the fiscal year. We are also considering announcing additional data for each of these studies within the current fiscal year. Details will be provided once the announcements officially confirmed. Although this is an ex event that has already been achieved, we initiated a global Phase IbII study of ASP-five 46 led by Astellas in April. SB-seven 317 will present additional data from Phase Ib trial at ARVO Association for Research in Vision and Ophthalmology in May.

28:03 For 18845, we are currently conducting additional analysis of a POC judgment and expect to reach a decision in the first half of the fiscal year. Finally, I would like to review corporate strategic plan for SCSB 2021. On Page 19, I will explain the transformation of our organizational culture and operating model that we undertook during the CSP twenty twenty one period. As a foundation to continuously generate innovations, we have implemented various initiatives related to human resources and organizational structure and have embedded them across company. In fostering organizational culture, we established organizational health goals at the start of the CSB twenty twenty one and advancing efforts company wide. As reported in the previous sustainability meetings, we have achieved many results directly linked to our business over the past fiscal years past five years, excuse me. Furthermore, in April 2025, we simplified and consolidated our culture foundation to define organizational values and behavior.

29:09 By ensuring that every employee acts based on a clear shared understanding, we aim to strengthen collaboration and create and deliver greater value to patients more quickly. We have also significantly transformed our operating models. Under the new structure launched in April 2018, shifted the top level management focus from vision or function to a patient access and introduced an end to end business model. With empowering cross functional teams organized around programs and brands and strongly promoting agile ways of working, we have enabled clear and rapid decision making, thereby improving productivity and efficiency. Page 20, the review of the performance goals in SSP 2021. Overall, we believe we have succeeded in establishing a foundation to overcome extended exclusivity and deliver sustainable growth beyond it, which was our original objective.

29:59 Regarding performance goal one revenue, thanks to our newly launched products such as Viosa, Isovae, Violoy and acceleration of life cycle management centered on PanchoCeF, the total sales of the strategic brands and Xtandi exceeded 1,400,000,000,000 yen Performance Go to pipeline value. We faced a situation where programs already underway at the start of SSP twenty '21 did not progress as anticipated. However, as explained at the R and D Day in March, we thoroughly focused on our strength and discipline in improving productivity through the transformation of our R and D organization. And by accelerating the development of priority programs, we achieved significant progress in expansion of the pipeline, including the achievement of total of four POC.

30:44 About Performance goals three, core operating margin. While we made investment associated with the launch of multiple new products, the SMT initiative progressed well, achieving cumulative cost optimization of 65,000,000,000 yen over two years. As a result, the core OP margin for FY 2025 reached 26%, up four percentage point year on compared to FY 2020. Page 21. To ensure the reliable execution of CSB 2021, we set three enterprise priorities closely linked to our performance goals and launched full scale implementation in FY 2024. Growth strategy aims to maximize the potential of strategic brands. Board ambition aims to increase pipeline value and sustainable margin transformation aims for company wide customer optimization.

31:33 The following slides will explain the result of each. Page 22, I will explain the result of maximizing the potential of strategic brands. In addition to PADDCEF and SOSPERA, which were already on the market at the start of CSP-twenty twenty one, we successfully launched Veoza, Isovae and Vyloid during the period of CSP-twenty twenty one, establishing a diverse high margin portfolio of strategic brands. Furthermore, we obtained approvals for Part C as first line treatment for MUC and for the additional indication of MIPC, which serve as the key growth drivers, thereby further strengthening our growth foundation. As a result, our strategic brands expanded robustly, achieving a remarkable growth of 10 folds over five years. Since the majority of strategic brands are fully owned and are high margin brands, they have strongly elevated Astellas' overall revenue and profit growth during the CSP 2021 period.

32:35 The solid track record of build over the past five years has further increased the certainty of our future growth. We will carry this growth momentum forward into the next corporate strategic plan. On Page 23, I will explain the increase of pipeline value. We accelerate the development of flagship programs in each primary focus area and achieved four POC from three assets. Furthermore, we strategically and systematically generated follow on programs and incorporated external innovation based on our focus area approach, thereby expanding our pipeline. As a result, we have established a franchise in multiple therapeutic areas such as prostate cancer, Clodium eighteen point two targeted therapies and retinal diseases where we have cultivated strengths through the development and sales of main products, thereby building a foundation for sustainable growth.

33:28 Page 24. I will explain the outcome of the SMT. Since launching the SMT in FY 2024, we have achieved cumulative cost optimization of 65,000,000,000 yen over two years. Furthermore, cost optimization measures for FY 2026 and 2027 have already been identified, and we are now at the stage of ensuring their reliable execution. We are fully on track to achieve total cost optimization target of 150,000,000,000 yen In addition, the SG and A ratio improved by a total of more than five percentage points over the two year period from FY 'twenty four to 'twenty five, and we are gaining clear traction toward improving profitability. Moving forward, we will continue to advance cost optimization through SMT to establish a highly profitable financial structure.

34:18 Page 25. I will explain the revenue and core OP growth over CSP 2021 period. Revenue expanded 1.7% over the five years driven by the strong growth of strategic brands. Core OP expanded 2.2 fold over five years driven not only by the revenue growth but also by significant contributions from cost optimization through SMT starting in FY 'twenty four. The core P margin also improved significantly. Page 26, today's key takeaways. Our strategic brands delivered exceptional growth, raising confidence for future expansion. Furthermore, we have established a robust pipeline and built foundation towards post extend the loss of exclusivity growth.

35:07 Additionally, through SMT cost optimization, we have made significant progress toward a resilient cost structure. Over the five year period of CSP 2021, we are now fully prepared to overcome the extended loss of exclusivity and to continue to grow. In our next corporate strategic plan, we aim to demonstrate how we will achieve sustainable growth by building on the foundation we have established to date. At the end, I would like to remind you of the briefing session for SCSP twenty twenty six. It will be held on May 26, and we hope you will be able to attend. That concludes my presentation. Thank you for your attention. That's all as our presentation.

35:58 We now would like to entertain questions from the audience. Screen. If you're joining from your smartphone, please tap details then raise hand will be shown. So please press raise hand. I will name you one by one. If your name is called, please unmute yourself on your own screen, mention your name and affiliation and ask questions. So that as many people as possible can ask questions, Each person can ask up to two questions. Thank you very much for your understanding and cooperation. So we'd like to take questions.

36:48 First, Citigroup Securities, Mr. Yamaguchi, please. Yamaguchi from Citigroup, can you hear me? Yes, we can hear you. Thank you very much. Hello. Thank you. Thank you very much. My first question is as follows. As you explained during the presentation, for Strategic Brands in particular, you would share some forecast for some of the products, but not for Strategic Brands. So external parties cannot see the forecast.

37:35 It may be seen as restating, but how you're going to what are you going to do about the individual trends of each works. The disclosure of individual product information is not going to happen. What's the reason why? Could you explain once again? The results will be explained for each product as we have been doing up until now. But in the process of the growth of new products, there are uncertainties for each product. There is an increase or decrease for individual products.

38:24 Focusing on such fluctuation is not very constructive in our view. So based on that, what kind of action we are going to take and how that's going to be reflected onto the actual results? That's something we want analysts and investors to see. So this product is expected to have this much e revenue or sales in this particular region rather than having such e discussions. What we are hoping to discuss the situation of five strategic brands as a whole. So in the mid to long term, we are going to capture the development and the growth of the products. So it may not be the right expression, but you can demonstrate your capabilities.

39:18 So I'm looking forward to future interaction. So once again, you're on the May 26 at four p. M. You're going to explain the next CSP. So you're not going to talk about individual products very much. So between four and 05:30 p. M, are you going to share the presentation materials on the same day or the previous day? If you change, how we can prepare? So after the closure of the market, we are planning preparing to disclose the documents after the close of the market like at 03:00 like today. Thank you very much.

40:08 Next, JPMorgan Securities. Mr. Wako, please. Oko from JPMorgan speaking. Thank you very much. I have a question about Xtandi and the five strategic brands, the results in the fourth quarter and also the outlook for the current fiscal year. As to Xtandi, you can just talk about the actual results. Fourth quarter was a little bit weak in The United States. I'd like to know why five strategic brands, Budsave was doing very well. So what's going to happen this year, particularly in MIBC? How we should look at the situation?

40:57 I'd like to hear your view. And ISAVEA as well, the plan was not achieved, but in principle, it's going to grow continuously in the current fiscal year. I'd like to know more details. Thank you very much. You very much. Thank you. I'll make the summarized comments briefly. And because Claus is here, the rest is going to be explained by him. As has been mentioned, extended in the first quarter, the business is a bit weak and we did our own analysis. And of course, the countermeasures for that plan to be executed. But as you know for Xtandi, in twenty twenty seven January, in line with the IRA, the price is going to be revised.

41:42 So in the history of Xtandi, it's going to be the year of the reduction. And that impact was already explained within my presentation. And just like you mentioned, in FY 2025, the track record is that PADCEF and Vai Loy, monetary value wise, their growth level is outstanding. And Vai Loy, that was just launched in the market, so growth rate is over our expectation. And what is going to be happening for in FY 2026, we are not going to share with the individual products situation. So I don't know if it is right to talk about it. However, for Part C for the first line, other than United States, it's going to grow further. And as The U. S. Market as a trigger for MRBC market as well, we expect that the sales is going to contribute it. And as of April as well, 2025 is a little bit on a resting situation.

42:47 However, in this couple of months, looking at the track record of that time period, still there is a room of the growth. That's why we didn't revise our sales forecast. It has to grow further. So we are having such a very expectation. Kraussson, do you have any additional comment? Yes. Maybe just briefly to the three brands you asked about, Xtandi, Patzorf and Isurve. So I think the fourth quarter is indeed a little bit weaker, but we see the entire market being weaker in the ARPI. So I think it's probably a mix of market effect and turbulent competitive and market dynamics for Xtandi in that particular quarter.

43:37 But we've grown very, very well over the year, and we've now reached the peak sales for Xtandi. So I think that's a very strong contribution to our growth rate. Let me turn to PADCEV, because PADCEV, I think we need to distinguish between U. S. Growth where we have the three zero three, so the cis ineligible MIBC indication already approved. And on approval, as always, with PADCEV, we see the market responding very, very quickly and uptake goes up. However, please let me also remind you that, that uptake usually plateaus after about six months.

44:25 So we are expecting that also to happen. So U. S. Growth is very strong right now, but we do expect a plateau to come in end of Q1 or Q2. Whereas Europe and the other ex U. S. Countries do not have MIBC fashion in FY 2026. Here, we expect a strong growth to be driven by reimbursements coming through on the first line metastatic indication. So you get a very different dynamic in the two parts of the world. But overall, I think PATCEV will continue its strong growth trajectory. Now let me talk about IsoRV. You do remember about a year ago when the foundation funding dried up, the entire market, the new patient starts for the entire market, both in geographic atrophy but also in wet AMD, went down significantly.

45:28 And it has affected sort of the base from which we have regrown. As Naoki said, we have regrown from that lower base since then. But we've done it in a very consistent and very successful fashion. It's about 11% quarter on quarter that we've grown since that rebasing. And I also would like to draw the comparison to other products in the intravitreal space. So if you look at, let's say Eylea, Vabismo, Cyfovri, they've actually all decreased in sales. Eylea by 27%, Verbismar by 10%, Cyfovri by 4% and we actually have grown more than 30%.

46:23 So I think in a very difficult market environment, IsoRV has really produced a very, very impressive performance of consistently growing from that lower base. And we do expect that to continue as the complement inhibitor class also grows. Thank you very much for the details. As a follow-up, MIBC has a good market penetration, but it could reach a plateau quickly. That's understandable. As for three zero four to get the approval, So a similar thing can happen. Is that factored in into the forecast?

47:11 If the uptake is so fast, overall, there can be further increase by a positive? So the we do expect the three zero four approval by the PDUFA date as stated previously. So that would indeed then produce another uplift on PADCEV. Thank you very much. My second question. In the past five years, Xtandi Cliff is to be exceeded and you have a platform to increase your product. You have improved pipeline as well.

48:01 And I have a question to you. Large sized M and A possibility, how much leverage are you going to use? I think that's in the appendix. But in principle, according to the pipeline which is shared with us, you would exceed, extend the cliff to grow. Is that your assumption? Is my understanding correct? Depending on the status of the products under development you may need an M and A deal as a base case scenario, you would use your own pipeline to grow. Can I understand that way? Thank you for your question. Up until now, as we said a few times by now, this is an illustrative Xtandi figure.

48:47 Xtandi will decline, strategic products will increase. We would have programs from focus area approach to be added in a chart like this. In 2026, a peak is expected for sales. Then we have during the course of CSP 2026, our revenue may decline and then we go back to growth trend once again. And your view and our view may not be so different. Then if there's going to be a dip, a large M and A deal is going to be used to prevent the dip, to minimize the dip or to make it flat. If that's your question, we're not going to do such an M and A. That's my response.

49:38 This is the so called rescue BD to rescue from us from the dip or decline. We have no intention to do such a thing because such a deal would have an increasing price because everybody wants such an asset or transaction. After we get something, if there is a small room for us to get the value, it's not going to very good cash flow for deal. This is just the exchange for cash. So there aren't many elements to force us to do something like this. If we don't do a rescue deal, then are we going to pause BD? You may interpret that way in an extreme fashion. But as we have been doing before, our franchises and the existing primary focuses to be reinforced by technologies and attractive assets, we are going to pursue such opportunities very actively. Everybody talks about M and A very easily, but in the world of pharma, sharing the risks with the owners, there are many ways to do so. Back end licensing agreement is one way or milestone payments to be linked with regulatory outcome by doing so.

51:10 A huge amount of payment is made at the beginning, but nothing happens. We can prevent such a situation. Of course, we are making such efforts. Still having said so, how attractive our pipeline is right now because of this world failures could occur. So 2030 and beyond, the growth we want to achieve could not be envisioned. In that case, we should be able to use flexibility. So under Kitamura, we try to repay the debt as soon as possible. Gross leverage ratio, EBITDA one time up to 1.5 times as we declared.

51:56 We think we are already sufficiently within this range. If necessary, large size EBITDA can be done because we have such extra financial capabilities. EBITDA is growing bigger than before, so the money we earn would be returned to shareholders partially, but also we'd like to make R and D investments for future growth. And also various investments will be made by using such a money. For the details On the May 26, we will announce our CSP 2026. We will try to talk about our plan as much as possible and you can ask further questions during that meeting.

52:43 But that's all the information I can share today. Thank you very much. That's all. Thank you. Next, UBS Securities, six, please. UBS Securities, my name. Thank you very much for your explanation. First question is about dividend. At this time, 80 increased with 2 yen In the past two times, the increase is every 4 yen but this time, yen 2 increased. I believe that you had a lot of discussions about this situation. I believe that discussion was quite difficult, but you have four, four and this time, two. I think that itself includes some message, not about the CSB, but this 2 yen increase. What's your intention? What's the message? Kitamura is going to explain. Thank you for your question.

53:37 I'm Kitamura, CFO. First of all, this dividend, as Okamura explained, investment for the growth and also return to the shareholders, Those are continued. That is our policy for capital allocation. There is no change whatsoever on net. For dividend, a single rather than single year performance mid to long term performance cash flow forecast against that or based upon that, the stable dividend is provided. That is our decision. So 2 yen per year and the performance was good, so dividend increased. It's not something like that. We have a sustainable plan.

54:24 And this time, yen 2. In the past 4 yen increase, well, whether I'm talking about a single year, again, mid to long term perspective is necessary. And based upon that, we decided to increase to yen For details, around the end of May, when we make a presentation at next CSP, we would like to give further explanation. Currently, is good, cash flow is good, financial performance is strong. And just like Oka Murala mentioned, when we do something and we are fully prepared, so we'd like to be flexible to think about capital allocation.

55:09 That's all. The second question is about pipeline. Last week, AACR took place and the Keras competitors' data, Revolution Medicine's good data was shared, not only data, but also 55, the nonclinical data was also good. Based upon such data, your franchise, cameras, project, your ways to look at is not different. That area is still the therapeutic area worth investing. I am going to make an answer first of all, and followed by Taniguchi.

55:56 We consider that Keyera's is quite an important target. Their success means that Keyera's is definitely a target that we should more focus on. So their success is proving it, the difference of mechanism of action. But first of all, that data is a very earlier phase. So as the benefit due to the difference of mechanism of action is available in our product. So at the very end, when the late phase of data becomes available, that is the time we can say which wins or lose. I think as has been mentioned, thanks to their success, that became our confidence of targeting the carriers.

56:47 Thank you. Taniguchi speaking. As has been explained by Okamura, Revolution Medicine data, PAL RAS inhibitor by Revolution, and that data is disclosed, and this is really good data. We have the Keras target project. So, the Keras itself is quite promising. That's what I've learned, including PDAC, NSCLC, KRAS is suggested to be really good target for the treatment.

57:34 Cetidigresso that we have, the first line of PDAC Phase III has just started. Regarding this indication, we are a bit ahead compared to revolution medicine and our KRAS G12V targeting set aggressive. Not only efficacy but safety as well, the preferable result is available. So it is easier to combine with chemotherapy that is a current standard of medicine. In the case of PDAC in severe patients, it's difficult to administer the drugs already.

58:23 So IV infusion, CTD aggressive can be used for such patients as well. That's our expectation. As for the data, we disclosed some of the data already. And based on our data as well KRAS target is going to be important into the future for important PDAC and lung cancer targets. That's all from me. Thank you very much. Thank you very much. Next Goldman Sachs Securities. Mr. Weather please. I'm Weda from Goldman Sachs Securities. My first question, your initiatives in SMT, I'd like to know more details.

59:18 For the billion yen reduction is going to be incorporated into your plan for the current fiscal year. What kind of items are going to be the major ones? In 2027, your measures as was shown here, some are already identified. So what you're planning to do? Specifically, if there is is there anything you have already decided? What about the certainty of these measures are to be implemented. As we said, we are going to do something which is already identified, so we will just work on it. But still in areas like this, if we do something like this, we may not be able to realize the effect as we planned or it may take more time as we were planning. So the value could be diluted. So there can be such risks.

1:00:18 Now that everything is already identified, so we just need to do and work on that? No. And we have to pursue further opportunities for SMT continuously. Kitamura san can talk about the further details as far as we can share. In 2026, we are expecting additional JPY 40,000,000,000. By FY 2025, we work on various measures. And we'd like to harvest the benefits there. Specifically, as you know, we have global operations. In order to increase the productivity in FY 2025, we made huge investments, creating new bases to concentrate operations there to come up with a scale and implemented automation.

1:01:10 We took such a major action and we'd like to harvest the effectiveness there. So it will generate a certain level of huge benefits and creating necessary capabilities in house. That's also one of the measures we are working on. And also capabilities integration, including integration with vendors are also ongoing. So sales promotion related back office or material development and there can be a lot of synergy, so we are going to harvest the results. So those are the main things we are considering for FY 2026. What about 2027? We will explain in the future SMT is not a single year initiative, but it's a multiyear initiative. In the first year, we worked on lower hanging fruits, easier to realize to prepare for the mid to longer term in 2027.

1:02:10 That is going to be the final year. So action which requires a longer time and we are going to harvest the results from longer term projects such as supply chain. And larger scale projects with longer lead time would be realized in 2027. That's what we are expecting. Understood. Thank you very much. My second question. In The United States, I'd like to ask you about the business environment in The States, pharmaceutical duties and MFN. Are you do you have anything you can share in terms of the negotiation with U. S. Government and also MFN and the tariff?

1:03:03 How do you see the potential risks in your plan? Is that going to be fully manageable in your plan? So I'd like to ask you this question. Thank you. Thank you for your question. Needless to say, receiving a letter based on that negotiation with the authorities by some companies, you know those company names and what was the result. We heard such a rumor and the first round seems to come to an end. So we haven't received a letter from the U. S. Government, but still we do we try to open a channel to discuss with the government authorities. And looking at the components of the agreement, we can factors are incorporated and for each factor, what can we do, what we cannot do. Those are, of course, we've already considered and discussed.

1:04:18 Tariff or MFN. There are some rumors or stories that are ongoing, but we don't know any specifics. So we have prepared ourselves, but those are not really quantified so that it could be incorporated into the corporate strategic plan. Of course, we do a certain level of risk analysis. We have coming products from a focused approach.

1:05:03 And once they come to the market, what kind of price environment we will face around that time. For that purpose, we have to have a very sensitive antenna. From marketing access perspective, what can we do and what kind of preparation we need to do? Those are all under the consideration. This might be the repetition, but regulations and rules, those are not something we can set by ourselves. The rules and regulations are decided by somebody else and we basically have to follow that. And within in order to follow that, we do whatever we can do in a maximum way and the rules are likely to be changed and if there are some countermeasures conceivable, then we would do so. So that's probably the only way we can do for this type of issue.

1:05:59 Is this a big problem? Yes, it is likely become a big problem, but nothing can be started, just being moved or made action only with partial information. Because we have patients, the patients are around the world, we cannot make a decision. We think about only U. S. Patients and ignoring other countries' patients. We always would like to think about delivering value in a uniform manner through other world. I think that's probably what we can do. Did I answer your question? Thank you very much. That's all from me. Thank you very much. Next, Nomura Securities, Matsubara san please.

1:06:50 Matsubara from Nomura speaking. Thank I have two questions as well. The first one is a question related Ueda san, so a follow-up question about SMT. You might say that please wait up until CSFP 2026 announcement. There are some areas you can do the cost reduction. In FY 2027, afterwards, cost reduction through SMT is expect is not possible to be expected. Kitamura san? Thank you very much. Partly, this is personal opinion. First of all, cost optimization and journey of that, that is going to be continued. If you were to ask me, have you completed that? Well, that's one way to look at it. But at the same time, technology has been advancing day by day.

1:07:38 And as my personal perspective, cost optimization never ends. However, cost cut is not only the way, not only pursuing the numbers just in front of us. What is important is to continue to deal with that from mid- to long term perspective. For that purpose, you need a certain mechanism. And when you say cost, you tend to talk about only input, but maximizing output is also important. The bigger value is going to be delivered to the patients as early as possible. With doing that, we need to increase the productivity. So your question, are we going to do this FY27 afterwards? Of course, we will do that. What about approaches?

1:08:31 Well, we have a conventional approaches that is based upon the Sustainable Margin Transformation or SMT with a four year plan and execute those plan and the PTC is turned around. So it will continue the same thing? Well, I myself, this approach still has to be evolved. So rather than doing the same type of SMT for the next four years, rather we are going to accelerate that so that we can boldly work on this. And such details are going to be further explained possible to be explained at the time of CSB presentation.

1:09:16 Thank you. So then I'm looking forward to that. My second question is about ZOSPATA. In partial study, primary endpoint was not achieved. Peak sales assumption is 100 to 200,000,000,000 yen no change. So what's your view on the peak sales? Thank you for your question. Unfortunately, primary endpoint was not met. Regarding this indication, for us in principle, we are not going to pursue this indication globally anymore. As for the change in the sales forecast and what is going to be happening into the future, Closedida is going to add.

1:10:03 Close some. Yes. I mean, Sospata is on a stable growth path. It's not a very fast growth path, but it's a stable growth path. So we do expect that continue. And even in the PASHA study, there are some elements which are actually quite interesting for doctors to study. Our reputation for Sorsparta or gilterinib as a FLT3 inhibitor is very much intact even with a lot of first line competition coming into this market. We expect this agent to continue on that slow single digit growth path that we've had in the past.

1:10:57 Then for the future in subgroup with gene mutations, administering this to those patients who in combination with chemotherapy, primary endpoint was not met, but this ZOSPATA could be utilized in different types of patients. Is my understanding correct? Can you give us anything to add from you? Okay. May I? UNIDENTIFIED As for ZOSPATA PASIA study, primary endpoint was not met and analysis is now underway. Of course, subgroup analysis are included as well from various angles. Analysis is being performed. As soon as we get the results, we're hoping to share with you.

1:11:44 And in which segments we are going to go for or not going for, we are hoping to have such an opportunity so that we can explain. Okay, understood. Thank you very much. Thank you very much. Next, Morgan Stanley, MUFG Securities. Mr. Morocco, please. Thank you very much. Morgan Stanley, Muruka speaking. Most of the topics already covered, but Xtandi. Quarterly results or quarterly figures, hopefully, we've explained. Today, it doesn't make sense to talk about the details of each product.

1:12:33 But my question is according to your forecast for FY 2026, in the initial nine months, it may flat or increase, but in the fourth quarter, there can be a big decrease year on year. Is that your image perhaps? If you can share such an image, I'd like to hear. Thank you. Thank you very much. First of all, Xtandi as a whole, discussing the figures for Xtandi as a whole, we have it can be dangerous. So we have to discuss U. S. And ex U. S. Separately. As for U. S, as you said, in the fourth quarter, IRA will kick in. So how much is a different question, but it's clear that it's going to be in the negative column.

1:13:30 In other countries outside of The United States, there was the pace of growth. Up until now, it's going to slow, needless to say, because more than ten years have passed since the launch. If it's going to grow at the same pace as before, no, that's not going to happen. But we have embark data and other data we can use. So we still have room in the market where we can grow or we should grow. That's my basic principle. Claus, anything to add? No. Only to add that, of course, ex U. S, the patent the exclusivity is much longer, 28 in Europe, but in Japan, in Australia, in Russia and some other markets, have quite a long patent life. So this is not just one patent exclusivity that we lose. It's really country by country over many, many years, about over four years in total.

1:14:33 So that's the only thing I wanted to add. Thank you very much. One more question to you. Core OP margin, 30% has been discussed quite often by now. I may ask you a question about CSP, so I hesitate a bit. But 30 core operating profit margin is something you are very particular about in pursuing? If that's the case, how you're going to work on this? It's difficult to imagine because of the cliff, how you're going to achieve?

1:15:22 Where are you going to achieve this? There can be a decline and then you go up again. So what's your philosophy and how much you want to be particular about this? In a word, please looking forward to May 26, but I would like to make some comment here just a little bit before that day. I think in the past, I mentioned about it, we are this size of a pharmaceutical company and with innovation we try to contribute to the society. This is our style. And as such biopharma company, cost of goods 25%, SG and A 25% and the cost is reduced a little bit and SG and A might be increased a little bit and vice versa might happen.

1:16:16 But anyhow adding up these 50% is the level that we would like to manage. So before deduction of R and D, the profit is 50%. Out of that, the 20% of sales is allocated to R and D because that leads to the continuous delivery of innovation. That's my way of thinking. Based upon that, we come up with a number of 30%. The sales is reduced, so you cannot do in that way. I understand you would say in that way, but further details are going to be described on May 26. Understood. Thank you very much. One brief question. Milabetric, the actual January to March, dollars 180,000,000.

1:17:10 It's increased in that to that extent. What's the background of that? I just got a little bit confused. I can explain about this, Kitamura can explain in a thorough manner. First of all, you asked me a little bit trick with the generic companies. We come to the settlement. In line with that, other settlements took place and partially the royalty aspects are agreed, including the royalty as well in the fourth quarter and afterwards some adjustment is applied. That was the situation and that will continue. Precondition. So some others one time factor also added that leads to the increase in the fourth quarter rather than one time.

1:18:10 Precisely speaking, transaction not included until the third quarter is now included and agreed patent period. During that period, this will continue. That's the way to look at. So 26 metric number is disclosed. And as you know, the number is not that low. That's because of the inclusion of loyalty adjustment. Understood. Thank you very much. Thank you. Next, Macquarie Capital Securities, Tony Lansson, please. Yes. Okay perfect. Yeah thank you for taking my questions. I have two.

1:19:00 So the first one is about your intangible assets on slide number 35. You commented that you had some impairments for your gene therapy. It appears to me that the value for some very successful products such as Viloy and Isovae have also decreased a little bit. Could you comment, is it because of impairment or is it because of normal amortization? So that's my first question. I think the thank you for your question. I think the intangible asset is a combination of amortization, especially that is more like move to the sales right in the market.

1:19:49 Our product related intangible asset is now classified by the in process R and D to the sales right as us. And sales right, yes, they will be amortized over the years. So it's kind of very healthy transactions. Now the impairment loss are sometimes bigger in the in process R and D because the in process R and D amount stays as it is and up until the product will qualify to the market. If we fail to qualify the market, we need to write off those assets 100%. Now we didn't have we did have the impairment loss recorded in AT132. That is the gene therapy product asset, but we have the new asset in the clinical trial. So we shift our focus from 130 to the 29.

1:20:42 57. 57, thank you, as Naoki already mentioned. So I see the different move in intangible asset. But overall, this time, we make the progress so that we shift to the focus from one project to new project and also the amortization start and move as we planned because the product is in market. I hope I answered your questions. Yes, it's very clear. Thank you very much, Kitamura. Second question is about your clinical collaboration partner, Kelonia. Obviously Eli Lilly acquired Kelonia.

1:21:28 You have been cooperating with Kelonia over CAR T, in vivo CAR T cell therapy since 2020, since early twenty twenty four. So it's about two years now. Have you you guys considered acquiring Kelonia? Was it because you did not want to compete against the Eli Lilly or was it because CAR T or blood cancer is not part of your key priorities? And how does your collaboration with Colonial change after the Eli Lilly acquisition? Thank you for the question. Probably that question should be answered in a very scientific aspect, so I would like Tadaki to answer those.

1:22:20 So thank you. Our Kelonia collaboration is actually have one project. And as you mentioned, that in vivo CAR T platform, we work together in a preclinical, the program. Our decision is that we're pursuing that project moving forward further. So we terminated that project. And so that's where we are now. And so I don't think we have any impact that Lilly is going to be acquired at Kelowna. And of course, we have connection with them, but we don't have any significant project working with them now.

1:23:10 Okay. Did you guys have the discussion over possibly acquiring Kelowna? No, obviously, we have no intention to do that. Okay, thank you very much. Thank you very much. UNIDENTIFIED you very much. Next, Sanford, CE Bernstein, Ms. Sogi, please. Thank you very much. First, about KRAS, I have a question to you. Revelation medicines, pan KRAS derexionrasib. Phase III results were announced for a second line E plus for PDAC.

1:23:55 As for the first line, they have a PDAC program, monotherapy E combination. And your CTD aggressive KRAS G12D and competitor is going to be earlier. Because of the PANRAAS for revolution medicine, this one may be more effective or similarly effective KRAS G12D specific target is your product. So this can be a disadvantage for your product. PANRAAS versus KRAS G12D specific? In terms of efficacy, what kind of scenario are you hoping to see?

1:24:42 It's too early to say specifics to explain the differences, but Taniguchi is going to explain as much as he can. Thank you very much for your question. Revolution Span RAS, it's Span RAS, so it's not just limited to KRAS, but RAS ON inhibitor more broadly. Because of this, the target patient population is broader according to understanding. Maybe because of that, we don't know clearly, but I saw their data, for example, of skin related adverse events and GI related adverse events seem to be high in the incidence according to our impression.

1:25:31 When this is brought to the clinic, what's going to happen? Regarding our thirty day aggressive, not just efficacy, but safety relatively speaking is also favorable according to understanding. So we just started PDAC first line study chemotherapy combination is going to be the main regimen in the study we are planning to execute. When I discuss with the doctors, the appearance might be different from doctor to doctor, but in the targeted population by the drug and drug with broader coverage, which one to use first?

1:26:24 As far as we have heard from the doctors, more targeted product is the one they would like to use. So such a response is more frequent. So once the Phase I data is going to be available, they would decide. One more question. Is the B2998 Trop2 targeting iAGC that is a new type of AADC? Regarding LINKAR, within the cancer cells selectively it is cleaved or outside, especially regarding sting agonist outside of the cancer cells when it's released, it comes into the cancer cells for the action. Is it already confirmed?

1:27:27 And also these linkers cleaved only within the cancer cells. For that, I think that has to be the patient selection strategy considering their Trop-two ADC development so far. With this regards, what is your strategy? Taniguchi is going to explain. Thank you very much. That is a very scientific question. 2998, as has been mentioned, STING agonist and also TOPO-one are used as dual payload targeting TROP-two. This is such ADC.

1:28:15 And if that gets cleaved around the target, the design is in that way, according to my understanding. One of the characteristics of this drug is Trop-two target, not only ADC, but because of the existence of STING, there very tumor or tumor microenvironment, then activity is promoted to enhance the antitumor action. That is the concept of the design. Looking at the preclinical data. Compared to the conventional ADC targeting drop, efficacy is superior.

1:29:11 So that is where we have higher expectation. And what is the focus of STING? If we learn about that, we can share that with you, but so far I don't remember the data, so I take it back, I bring it back. And if I identify some information, I would like to share that. Thank you very much. There are some more waiting for asking questions, but because of the time, next is the last question. Nikkei Newspaper, Ozaki san, please. Ozaki from Nikkei Newspaper, can you hear me? Yes, please. Thank you. This might be a little bit different question.

1:30:01 The current Middle East situation, I just wonder if that has impact on to your business, not the previous time, but for this time, does it have any impact? Thank you for your question. The middle is the countries where we have footprint and having operations. Of course, the employee safety is a priority. At the same time, it's the area of the war. Because it's the area of wall, there are patients who are still requiring our products, so we definitely would like to make sure the delivery of the products to them. The homes straight is now closed, and because of the various type of the oil related materials are a bit delayed in terms of the delivery.

1:31:03 And with that impact perspective, so far, we can say that there is no big impact on us and we are not thinking that we'll have a bigger impact. But our product is one of the component of the all of the medicine or healthcare. And as has been mentioned, if there are some more problems that happen for the materials, for example, the infusion bag issue or cylinder for the injections, injections. If there were some problems in terms of the supply of those, there might be the question or problems incurred. So we always would like to continue to pay attention. And as we mentioned, the topic of the U. S. Administration, we are not going to be reactive for each individual events.

1:31:57 Of course, we do our preparation. We do not consider that the business is going to be over certain better or the worse, it's just one thing. So we would like to be prepared all the time. Understood. Thank you very much. Thank you for many questions. Time has come. So with this, we'd like to close today's meeting here. Thank you very much for joining us once again.