Takeda Pharmaceutical Co. Ltd. Sponsored ADR Stock

[Interpreted] Thank you very much for joining us today for Takeda's 2026 Q2 earnings announcement despite your busy schedules. My name is O'Reilly, Head of IR. I'll be serving as the MC today. Thank you for this opportunity. [Operator Instructions]

Before starting, I would like to remind everyone that we'll be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause our actual results to differ materially are discussed in our most recent Form 20-F and in our other SEC filings. Please also refer to the important notice on Page 2 of the presentation regarding forward-looking statements and our non-IFRS financial measures, which will also be discussed during this call. Definitions of our non-IFRS measures and reconciliations with the comparable IFRS financial measures are included in the appendix to that presentation.

Now we would like to start today's presentation. We will hear from President and CEO, Julie Kim, Chief Financial Officer, Milano Furuta; and R&D President, Andy Plump. And this will be followed by a Q&A session.

Now we'll get started. Julie, please go ahead.

Thank you, Chris, and thank you all for joining us today for Takeda's second quarter earnings call for fiscal year 2026. Our goal is to deliver a meaningful impact for patients and lasting value for our shareholders. And in the first half of this fiscal year, I am proud of what we've accomplished towards achieving that. We'll continue delivering impact and value by leading in our therapeutic areas, building portfolio depth through science, innovation and speed from discovery to access.

Our generational promise to boldly reinvent for a healthier world remains at the heart of everything we do. And I want to thank our colleagues as well as the patients, families and health care professionals who make this progress possible.

Starting with Slide 5. Our fiscal 2026 first half results demonstrate strong execution across our priorities. Let me walk you through the numbers. In the first half, core revenue was just over JPY 2.4 trillion, a decrease of 1% at constant exchange rate or CER. This reflects the resilience of our core in-line brands and headwinds in our mature and off-patent portfolio that are not yet fully offset by our recent launches. Core operating profit was JPY 710.6 billion, an increase of 0.7% at CER. And core EPS was JPY 308, a decrease of 1.2% at CER. As we outlined in May, core operating profit reflects the investments we're making to support our new launches and our late-stage pipeline. And we're largely offsetting those investments with the savings our transformation program is delivering.

Overall, our first half results demonstrate that we are on track against our FY 2026 priorities, and we will continue our disciplined execution to deliver on our revised full year forecast and management guidance. The right side of the slide highlights our pipeline and portfolio progress since last earnings. Our first priority in Horizon 1 is to execute successful new product launches. We are pleased that ORZEYFUL launched in Japan and China this month for the treatment of narcolepsy type 1, and we expect to launch in the U.S. in early November following the completion of DEA scheduling. We also launched MIMRYLO in the U.S. in August, a first-in-class new treatment for patients with polycythemia vera. In addition, we secured approval for ELAHERE, which we're commercializing only in Japan for folate receptor alpha-positive platinum-resistant recurrent ovarian cancer.

We also made progress with regulatory submissions, reflecting our continued momentum to bring new medicines to patients. The FDA accepted our new drug application for zasocitinib in psoriasis under priority review and the EMA accepted our marketing authorization application. We also filed TAK-881, our 20% hyaluronidase facilitated subcutaneous immunoglobulin program in the U.S. for primary immunodeficiency.

Our second priority this year is to advance our late-stage pipeline, where we have made significant progress across other late-stage programs. At the European Society for Medical Oncology Congress last week, we shared positive results from our Phase III study of TAK-921 in previously treated advanced gastric cancer. The study met its dual primary endpoints of overall survival and progression-free survival while demonstrating a manageable safety profile. These findings will support our planned regulatory filing in Japan, which we intend to submit during fiscal year 2027.

In addition, we've initiated a Phase III study of elritercept in myelofibrosis. We also remain committed to supporting our core in-line brands, which continue to deliver value for patients and underpin our performance. To this end, we presented positive results from the VERDICT study, adding to the strong body of evidence for ENTYVIO in ulcerative colitis. The study generated compelling evidence that ENTYVIO can achieve deep remission and meaningfully reduce the risk of UC-related complications with sustained benefit over time. Andy will dive deeper into this ENTYVIO study and our pipeline developments later in the call.

Lastly, our transformation is progressing well as we continue to strengthen our capabilities and drive efficiencies across the organization. As these initiatives gain traction, the realized savings are funding new launches and late-stage pipeline while protecting core operating profit. Beyond these financial benefits, our transformation is building the agility we need to support Takeda's next phase of growth. Milano will walk through our savings progress later and how we are reinvesting for accelerated growth.

Let me now turn to ORZEYFUL and how excited we are about this new class of medicine. ORZEYFUL is a first-in-class oral orexin receptor 2 agonist for the treatment of narcolepsy type 1 or NT1. Unlike treatments that focus on individual symptoms, it is designed to address the underlying orexin deficiency. We believe it has the potential to redefine the standard of care by delivering transformative efficacy across a broad range of NT1 symptoms.

NT1 diagnosis is a challenge. The diagnosis rate ranges from less than 10% in China to roughly 40% and 50% in Japan and the U.S., respectively. And in the U.S., more than half of patients diagnosed with NT1 continue to experience symptoms despite switching treatments or taking multiple medications. In all markets, we will first focus on individuals who have already been diagnosed. At the time of our last call, ORZEYFUL had just been approved in China. And since then, it has also been approved in the U.S. and Japan, all within about 1 month. ORZEYFUL launched simultaneously in Japan and China on October 15, and we're really excited about the potential to fundamentally change how NT1 is managed with great early response from both patients and HCPs.

In the U.S., we've been preparing for launch for more than a year with our medical teams engaging sleep specialists and our specialty pharmacy network and patient support programs now in place. We expect to launch ORZEYFUL through specialty pharmacies as soon as DEA scheduling is complete, which we anticipate by early November. Finally, it makes me extremely proud to share that ORZEYFUL was recently selected as one of TIME Magazine's best inventions of 2026 in the scientific innovation category.

Turning to the next slide. We're also thrilled about the early progress with MIMRYLO, an FDA-approved treatment for erythrocytosis in adults with polycythemia vera. MIMRYLO received FDA approval on August 28 and became commercially available very soon thereafter. This is a first-in-class hepcidin mimetic and is administered once weekly by subcutaneous injection. MIMRYLO provides rapid, stable and durable hematocrit control, the primary goal of PV treatment and has been shown to reduce the burden of phlebotomy and improve fatigue. The prescribing label allows physicians to use MIMRYLO at any point in the treatment paradigm with no box warning, giving us clear differentiation over other advanced therapies approved in this area.

Also, it is the only PV treatment listed as a category 1 recommendation in the NCCN guidelines for both high- and low-risk patients. This medicine addresses a disease affecting approximately 90,000 people in the United States. We have been educating physicians about the burden of uncontrolled hematocrit and repeated phlebotomy and identifying patients who can benefit from a new treatment option. We are also leveraging our established hematology capabilities, payer relationships and patient support resources to support the launch and build momentum. At this early stage, we are focused on raising physician awareness and securing payer coverage so that appropriate patients can access MIMRYLO. Our goal is to build the foundation for both durable adoption and meaningful patient impact.

If we go to Slide 8, we've talked about ORZEYFUL and MIMRYLO, so let me focus on our third transformative medicine that we expect approval for within this fiscal year, zasocitinib. The FDA has accepted our application under priority review and the EMA has also accepted our application. The clinical data for zasocitinib are compelling, including head-to-head Phase III results demonstrating superiority versus deucravacitinib in achieving clear skin. These results further strengthen our confidence in zasocitinib's potential to become a leading oral treatment for people with plaque psoriasis with rapid, durable and consistent skin clearance.

Andy will walk you through details of the head-to-head data shortly. Our payer engagement and field team preparations are well underway. We are positioned for a potential U.S. launch following the FDA approval decision planned in the fourth quarter of fiscal year 2026. For each of these medicines, we are tailoring our launch approach to the market while applying the same proven fundamentals, engaging with physicians and payers establishing specialty pharmacy and patient support programs and preparing our field teams. With ORZEYFUL and MIMRYLO launches already underway, zasocitinib will build on that experience and the experience from across our portfolio.

Today, we are in Horizon 1 of our 2 Horizon strategy, and our focus is clear: transform Takeda for growth. We are building the capabilities we need to lead and establish the foundation for accelerated growth. At the halfway point of this fiscal year, I am encouraged by the progress we have made against our priorities. Looking ahead, our focus remains on executing successful launches for medicines that are now reaching patients, advancing our late-stage pipeline with speed and quality, ensuring the resilience of our core in-line brands and executing transformation to position Takeda for sustainable, profitable growth. Each milestone we achieve builds our path towards Horizon 2, our growth acceleration phase. At our Capital Markets Day later this year, we will share more details on our progress and provide a lens into our longer-term growth strategy.

With that, I will hand the call over to Milano.

Thank you, Julie, and hello, everyone. Let me walk you through our FY '26 first half results and updated full year outlook. Slide 11 summarizes our H1 results. Overall, I'm pleased to say that our financial performance is well on track with our expectations. We have positioned FY '26 as a year of investment. We are managing headwinds in our mature and off-patent portfolio while advancing our pipeline and launching new products that will be the drivers of future growth.

Revenue in H1 was JPY 2.4 trillion, an increase of 8.4% at an actual FX rate or a decline of 1% at constant exchange rates or CER. Core operating profit was JPY 710.6 billion, up 11.2% at an actual exchange rate and 0.7% at CER. We are seeing the benefits of the transformation program we initiated this year with savings being reallocated towards investments in new product launches and R&D. Core EPS was JPY 308, a decline of 1.2% at CER. Meanwhile, reported EPS was JPY 193 with year-on-year growth of 169% at actual FX. This reflects an increase in reported operating profit due to lower amortization and impairment expenses as well as a very low tax rate in H1 this year, partially due to timing of legal entity restructuring, which will be normalized in H2.

Operating cash flow was JPY 431.9 billion, and adjusted free cash flow was JPY 325.7 billion. This was lower than prior year due to reduction of our trade receivables factoring program as well as a payment to Protagonist related to their decision to opt out of MIMRYLO co-commercialization in the U.S.

The transformation program started earlier this year, an initiative to strengthen Takeda's competitiveness and accelerate our future growth outlook. In the 6 months since we started the program, we have made progress across our transformation initiatives such as centralizing and streamlining corporate functions such as HR, finance and communications, reducing layers, particularly in the commercial organizations, bringing leaders closer to patients and customers, strengthening procurement excellence and simplifying processes with digital technologies and expanding our global capability centers.

Related to the organization design, we have moved with speed to implement changes. As of September 30, approximately 3,000 impacted roles have been communicated. In procurement, to date, we have implemented initiatives resulting in approximately JPY 30 billion of annualized savings. This program remains on track to achieve JPY 100 billion of gross savings with JPY 160 billion of restructuring costs in FY '26, JPY 10 billion less than our original forecast. Over the next few slides, I'll explain more about our year-on-year performance.

First, revenue. New launches, which are products that launched in the past 5 years, still represents only 4% of total revenue today, but are growing well at 17.3% at CER. We look forward to expanding this category significantly in the coming quarters as we launch and drive uptake of ORZEYFUL, MIMRYLO and zasocitinib. Core in-line brands, which includes large established products such as ENTYVIO, immunoglobulin and TAKHZYRO represented 58% of total revenue and grew 0.5% at CER. The growth of new launches and the core in-line brands partially offset headwinds from loss of exclusivity products such as VYVANSE and a mature portfolio such as hemophilia franchise, resulting in overall revenue decline of 1% at CER. On an actual FX basis, the depreciation of the yen had a positive impact of JPY 210 billion, resulting in reported revenue of JPY 2.407 trillion, up 8.4% versus prior year.

Slide 14 shows the bridge in core operating profit. Overall, growth was 0.7% at CER with OpEx savings from our transformation program helping to fund increased investment behind our growth priorities, including launch preparation for ORZEYFUL, MIMRYLO and zasocitinib and the continued progression of our R&D pipeline. FX was also positive for core operating profit, pushing the growth to 11.2% at an actual exchange rate.

Next, reported operating profit on Slide 15. The main items driving the 60.4% improvement versus prior year were lower amortization costs due to the conclusion of VYVANSE amortization in January 2026 and lower impairment of intangible assets compared to the prior year, mainly due to a charge in FY '25 related to discontinuation of our cell therapy efforts.

Moving now to our updated outlook for full year FY '26. Starting with management guidance for CER growth, we maintain our revenue guidance of low single-digit percent decline. We have made some adjustments on a product-by-product basis, which you can confirm in our supplemental materials. This includes reducing our forecast for albumin to reflect ongoing market dynamics, while on the other hand, increasing VYVANSE and TRINTELLIX. We maintain our outlook for immunoglobulin with expectation of a growth rebound in second half, and we will continue to monitor competitive and pricing dynamics.

We are raising our management guidance for core operating profit and core EPS to reflect transaction FX benefits. Outside of FX, the underlying business continues to perform very much in line with our initial expectations for the year. The bottom half of the slide shows our forecast on an absolute basis. We are raising our revenue forecast by JPY 60 billion and the core operating profit forecast by JPY 30 billion, also mainly due to a change in FX rate assumptions.

The final slide in my section shows a bridge from our original operating profit forecast of JPY 1.16 trillion to the revised forecast of JPY 1.19 trillion. As explained on the previous slide, the main reason for the increase is FX. There is some movements by line item in our forecast as a savings target originally in the SG&A budget has been reallocated to opportunities we identified in R&D and cost of goods. Overall, the key message here is that our first half results are on track. We are tightly managing costs across the P&L while still making the necessary investments to drive future growth.

Thank you for your attention. I will now hand over to Andy for pipeline highlights.

Thank you, Milano, and hello to everyone joining us on the call. Today, I would like to focus on 3 areas: emerging data for our flagship brand, ENTYVIO, that could change clinical practice, pipeline progress with an emphasis on our launch products and exciting new data for TAK-921. Together, these updates demonstrate progress against our Horizon 1 priorities, strengthening the resilience of our core in-line brands, delivering successful launches and advancing our pipeline.

Treat-to-target strategies have improved outcomes across many chronic diseases by moving beyond symptom control towards deeper objective measures of disease control. VERDICT is the first and only prospective treat-to-target trial in both moderate and severe ulcerative colitis patients, evaluating whether treating to more stringent composite endpoints with gut-focused ENTYVIO can improve long-term outcomes. Patients received standard ENTYVIO induction and every 8-week maintenance with steroid tapering. Physicians had the option to escalate treatment every 4 weeks as needed to hit targets.

The results demonstrate that treating to more stringent endpoints with ENTYVIO reduced the risk of UC-related complications by approximately 70% with this benefit extending up to 80 weeks after target achievement. ENTYVIO has been on the market for over 12 years with over 2 million patient years of therapy and a strong safety profile. It was thus not surprising that the safety was similar across the groups, even with the potential for more frequent dosing. VERDICT also provides compelling evidence that deep remission is achievable with ENTYVIO. More than half of the patients, 52.1% assigned to Group III, achieved the stringent disease clearance target.

These findings reinforce an important shift in our ambition for UC, moving beyond symptom control towards disease clearance. By treating earlier and to more stringent targets with ENTYVIO, we have the potential to reduce future complications and change the trajectory of this progressive disease. These data were very well received at the United European Gastroenterology Week, or UEG, and provide important new evidence supporting the role of ENTYVIO in a treat-to-target approach.

Let me now turn to our rapidly maturing pipeline that we believe can drive Takeda's next phase of growth. As Julie mentioned, we believe these 3 medicines will change the trajectory of Takeda's growth and importantly, make a meaningful difference for patients. ORZEYFUL is one of the most exciting stories in medical science today. The journey began with Emmanuel Mignot and Masashi Yanagisawa, whose identification of orexin deficiency as the root cause of narcolepsy earned them the 2026 Lasker Basic Medical Research Award. This summer, ORZEYFUL's Phase III data were published in the New England Journal of Medicine, the third time orexin biology has been highlighted there.

More recently, as Julie shared, TIME Magazine named ORZEYFUL one of the "Best inventions of 2026." Narcolepsy type 1 is a lifelong disorder caused by the loss of orexin signaling, leading to disabling daytime and nighttime symptoms. We have presented groundbreaking Phase III results and continue to generate additional data across the broad disease spectrum, which includes daytime symptoms like excessive daytime sleepiness and cataplexy as well as nighttime symptoms, cognitive symptoms, functional improvements and quality of life. ORZEYFUL does more than manage symptoms. It addresses the underlying orexin deficiency in NT1. As a single, well-tolerated oral therapy, it could restore how a majority of NT1 patients feel and function. ORZEYFUL is now available in Japan and China. We anticipate a DEA scheduling decision in the coming days with the U.S. launch to begin immediately thereafter.

MIMRYLO, our first-in-class hepcidin mimetic, represents a fundamentally different approach to managing polycythemia vera or PV. Rather than relying on repeated phlebotomy to remove excess red blood cells, MIMRYLO mimics the physiologic action of hepcidin, restricting iron availability for erythropoiesis and thereby controlling excessive red blood cell production. In clinical trials, MIMRYLO was able to provide rapid, stable and durable hematocrit control, reduce phlebotomy requirements and improve fatigue. Following its late August approval, MIMRYLO was rapidly incorporated into the NCCN guidelines in September as the only category 1 option for both low and high-risk PV. Category 1 is reserved for medicine supported by high-level Phase III evidence and uniform expert consensus. Encouraging early physician and patient feedback further reinforce the potential for MIMRYLO to change how PV is managed.

Zasocitinib is our next-generation, highly selective oral TYK2 inhibitor, which has demonstrated rapid and durable skin clearance in a convenient once-daily pill. We have filed for approval in the U.S. and Europe. We also had new data presented at EADV that makes the profile even more compelling. The Phase III LATITUDE Atlas trial directly compares zasocitinib with deucravacitinib using PASI 100 as the primary endpoint. The key takeaway is straightforward. At week 16, 36.5% of patients treated with zasocitinib achieved complete skin clearance. This is the highest rate of skin clearance demonstrated by an oral therapy in psoriasis.

For patients, complete clearance is the desired outcome. We also saw improvement in itch in zasocitinib beginning as early as week 2. Importantly, the safety profile was consistent with prior trials. Taken all together, these results reinforce our confidence in zasocitinib as a potentially important oral treatment for people living with psoriasis. We are looking forward to updating you on our regulatory progress in the U.S. and Europe. And later this fiscal year, we plan to share additional zasocitinib data, including robust 52-week durability data from our 3003 study. We continue to execute across our broad late-stage portfolio with many important Phase II and Phase III readouts ahead.

Today, I'll focus on 2 programs that generate frequent questions, zasocitinib in ulcerative colitis and Crohn's disease, and TAK-360 in narcolepsy type 2 and idiopathic hypersomnia. While we had initially planned to disclose the zasocitinib UC and Crohn's results together, we've decided to share a directional summary of the UC data today. Our expectations have been somewhat more measured in UC given the mechanistic rationale, which we believe may be even stronger in Crohn's disease. Against that backdrop, we found the UC results encouraging.

In brief, we've completed our zasocitinib Phase II ulcerative colitis study and are pleased with the clinical remission rate observed at week 12. We saw a strong separation from placebo and a nominally significant p-value at 1 of the 2 doses tested. Overall clinical remission results are on par with other investigational oral products in Phase II UC studies. Safety across all dose arms remain consistent with our experience in previous trials. While we have not observed a dose-dependent efficacy effect, this is not unusual in dose-ranging IBD studies, and we are actively evaluating potential factors that may have contributed to the dose response profile.

Importantly, the full dose-ranging Crohn's disease study will provide additional data. We expect the Phase IIb Crohn's readout around the end of fiscal year 2026. We are planning for success, and our team is working on Phase III scenarios in both indications. And ultimately, our path forward will be based on the totality of evidence across the program.

Next, the orexin franchise continues to advance well with ORZEYFUL approved in the United States, Japan and China for narcolepsy type 1. NT1 is the only orexin-deficient disease. In other more heterogeneous patient populations, we are working hard to untangle the biology and determine the right orexin profile for each central disorder of hypersomnolence and for the other potential indications. TAK-360 is being studied in orexin normal populations like NT2 and idiopathic hypersomnia, where we aim to address key symptoms and expect to have results in Q4 of fiscal year 2026.

Now let me turn to oncology. Oncology continues to execute across its broad portfolio with the approval of MIMRYLO in the U.S. Elritercept has started Phase III trials in myelofibrosis and in first-line myelodysplastic syndrome and is enrolling well. TAK-921 had potentially practice-changing data in advanced gastric cancer, which we will review shortly. In PDT, we have completed a U.S. regulatory filing for TAK-881, our 20% next-generation facilitated subcutaneous IG for primary immune deficiency, and are on track to complete filings in multiple indications in Europe and Japan later this fiscal year.

Let me close our pipeline review with the latest data for TAK-921. TAK-921 is our investigational Claudin 18.2 targeted antibody drug conjugate with an Fc-silenced backbone, delivering a potent exatecan topoisomerase I inhibitor payload to tumors. Last week at ESMO, we presented groundbreaking Phase III data for TAK-921 in advanced gastric cancer versus chemotherapy. The patients enrolled were refractory to at least 3 lines of therapy with 30% of patients on their fourth or fifth line, representing an area of true unmet need. In this very sick patient population, TAK-921 delivered an exceptional improvement in objective response rate, statistically significant progression-free survival that hit at the first interim analysis and statistically significant and clinically meaningful overall survival with a hazard ratio of 0.57.

The safety also remained differentiated with limited severe gastrointestinal toxicities, including nausea and vomiting. Grade III or higher treatment-related adverse events, dose reductions and delays were less frequent than in the chemotherapy arm. We believe TAK-921's Fc-silenced design provides a competitive advantage in gastrointestinal tolerability relative to other Claudin 18.2 targeted therapies. This profile may make it more suitable for combination with current and future standards of care in first-line gastric and pancreatic cancer.

We plan on filing for approval in Japan for previously treated advanced gastric cancer in fiscal year 2027. Proof-of-concept studies are ongoing globally for first-line gastric and pancreatic cancer with readouts expected over the next 18 months. Let me conclude by repeating that this is the best pipeline Takeda has had in the modern era. I have never been more confident in the science, the team behind it or our ability to improve our patients' lives and build a healthier world for generations. We look forward to sharing our continued progress with you.

Thank you. And with that, I'll now turn it back to Julie for closing remarks. Julie?

Thank you, Andy. As you've heard today, we are making steady progress across all 4 of our Horizon 1 priorities. We are building new growth drivers through the ongoing and upcoming launches of 3 new medicines for ORZEYFUL, MIMRYLO, and zasocitinib. Our late-stage pipeline continues to move through key inflection points, including positive overall survival and progression-free survival data for TAK-921 and the start of a Phase III study for elritercept.

Our core in-line brands such as ENTYVIO, continue to be resilient and performed broadly in line with our expectations. And our transformation is delivering. It is unlocking new capabilities and generating savings that we are reinvesting in our launches and pipeline. Taken together, this progress gives us confidence in our trajectory. Each milestone strengthens the foundation for Horizon 2 and brings us closer to sustainable, profitable growth and greater impact for patients.

With that, I'll turn the call over to Chris for questions.

[Interpreted] Now we would like to start receiving questions. We have Julie, Furuta and Andy and also Rhonda Pacheco, President, U.S. Business Unit, Teresa Bitetti, President, Oncology Business Unit; and Ramy Riad, President, Plasma-Derived Therapies Business Unit as well.

[Operator Instructions] The floor is now open. First question from Yamaguchi-san from Citi.

I have 2 questions. The first question is regarding MIMRYLO. The product looks pretty good, but you hinted that it takes some time to get the reimbursement treatment. But can you give me some early launch sort of impressions, number-wise or some other key success factor-wise? That's the first question.

And the second questions is that thank you very much for sharing the UC, the top-line data of zaso. And the information you gave me are still a little bit confusing to me, especially the dose dependency issue. And I understand it didn't happen on IBD in the past, but can you clarify out of 2 doses, which has a good data and which one didn't? And what do you need to understand further to decide whether you can go to the Phase III or not because a dose dependency issue, a bit of a question from the investment community at the moment.

Thank you, Yamaguchi-san, for your questions. So the first question on MIMRYLO launch uptake and reimbursement. So our President of Oncology, Teresa Bitetti, can answer that question.

And your second question on the UC top line announcement and what we would need to see for a Phase III decision. Andy Plump can comment on that one, please. Teresa?

This is Teresa. Thank you so much for that question. We're very excited around how the launch is going. I'll remind you that MIMRYLO was the first time in over 10 years that we have had a new mechanism in this marketplace that truly addresses the gold standard of treatment for PV, which is keeping that hematocrit level consistently, durably and rapidly below the 45% range. And as we move into this market, we know that 78% of the patients remain above at various points in time, the 45% mark.

And if you're above 45%, you're at a 4x higher risk of death or a cardiovascular event. So we have found the reception. It is early days in the launch. We were approved at the end of August. The reception from the HCP market and from patients has been very excited, very positive. The execution of the launch is going very well. It is early days, so we don't have quantitative measures to share, but I can tell you from what I'm hearing on the ground that there is enthusiasm across the board and things are proceeding exactly as we planned with a real focus on education, awareness as well as ensuring access. So thank you for the question.

Yes, Yamaguchi-san, this is Andy, and thank you very much for the question. We are, of course, expecting questions on the UC zaso disclosure. So you may recall that we had originally disclosed that we would share data together for UC and Crohn's. So we decided to pivot and there are a couple of reasons behind the pivot. One is that there's going to be about a 6- to 7-month delay between the UC data and the Crohn's disease data. So that's a bit longer than what we had hoped for.

The second is that the UC data were actually more encouraging in many ways than what we had expected. As we've discussed previously, we're quite excited about the broad profile of zasocitinib. We think that this is truly a best-in-class TYK2 inhibitor. We do -- the mechanism in ulcerative colitis has carried a little bit of baggage historically because there's been 2 failed trials in UC. And mechanistically, the rationale points to, we think, a greater likelihood of success in Crohn's disease -- so we put all that together, our initial plan was to disclose the 2 data sets as one.

When we saw the UC data set, we were quite pleased with the efficacy at the middle dose. And as I mentioned in the presentation, directionally, the efficacy is on par with what's been seen with other oral agents in ulcerative colitis. And importantly, at both doses, the safety profile was very consistent with the safety profile that we've seen at the 30-milligram dose in psoriasis. The study is a complex study, though, because we don't see a dose response. So we see a robust efficacy at the 50-milligram dose with a strong nominal p-value, but we're not seeing that with the 75-milligram dose. And as I mentioned, it's not uncommon in IBD to see, especially in smaller Phase IIb studies, a lack of a dose response. We're working hard to understand this mechanistically. And in the end, we'll look forward to seeing the Crohn's data and putting those 2 data sets together to make a decision on whether and how we move forward with Phase III.

Just a little bit of update. You're happy with the 50 milligram, but the 50 milligram, 75 milligram didn't show. So is it fair to say you can go ahead with the 50 milligram or you need a more dose dependency analysis even further?

Well, I think that the data as -- the data stands suggests that we have a path forward in IBD. But before we make that decision and before we decide what Phase III will look like, we really want to look at the Crohn's disease data and the 2 data sets together. There's also, I'll say -- and many of you may have seen this from the United European Gastroenterology Week, there's a huge push towards combination therapies, particularly with parenterally administered agents. But I think that's going to happen more and more with oral agents. And we think given the nature of zasocitinib and the early data that we've seen in UC, we'll wait for Crohn's disease. We think that not only could this be effective as a monotherapy, but this could be a cornerstone of combination therapies potentially in the future.

[Interpreted] Thank you. Next. Morgan Stanley, Muraoka-san.

[Interpreted] Muraoka from Morgan Stanley. My first question is about that UC topic. And in your presentation deck, clinical remission rate compared to other investigational oral drugs, it was comparable. That's 30% and 20% at the doses of 400 milligrams and at 200 milligrams, respectively. And that number was not obtained, but you saw the dose dependency. Is that right understanding?

And next question is about NT2. I think the way that you disclosed the data, did you say January through March, it will be press released first and then it will be presented at the medical scientific convention. Is it what you are planning? These are 2 questions.

So the first, if we could provide any more insight on to the comment around the zasocitinib UC data being on par with other orals in this space?

And then the second question on TAK-360. We commented data expected in January to March 2027. What would be the plan in terms of disclosing the top line, whether a press release and/or Congress presentation. So Andy Plump to take both of those questions, please.

Thank you, Muraoka-san. So again, on the zaso UC Phase II data, we see a strong nominal p-value at the 50-milligram dose. We see a robust effect size on our primary endpoint clinical remission. We see consistent effects on our secondary endpoints, including objective endoscopic endpoints. And directionally, these are on par with what's been seen with other oral agents. At this point, we don't have additional details to share. When we get the Crohn's disease data, which we anticipate at the end of this fiscal year, we'll have a chance to evaluate those data together and share them as a complete data set.

With regards to TAK-360, 2 ongoing studies in IH and in type 2 narcolepsy. As we've discussed previously, the design of these studies is adaptive that allows us within the study to rapidly shift from different doses and different dosing administration strategies, which we think is critical to understanding how you thread the needle with dosing in these populations given the potential for efficacy and for some of the tolerability issues. The data from those studies will be presented later in the -- we will have the data from those studies later in the fiscal year. How and where exactly we share those data will depend on what those data look like and strategically how we'd like to disclose. We don't have a precise plan at this point.

Up next, I'd like to call on Stephen Barker from Jefferies.

Steve Barker from Jefferies. Two questions again about zaso in UC and MIMRYLO. So regarding zaso in UC, can you clarify if it was the high dose or the low dose, which showed indications of efficacy?

And then regarding MIMRYLO, can you give us some indication of what the percentage of covered lives is right now? And how long -- what's the path to broader coverage, please?

Thanks, Steve. So again, a question on zaso UC for Andy on the dosing clarification and then MIMRYLO on reimbursement to Teresa again, please?

Stephen, we saw the robust effect with the strong nominal p-value at the 50-milligram dose, and we didn't see that effect at the 75-milligram dose.

So as a follow-up, considering that the higher dose didn't reach significance, is there any reason to think that the low dose result is meaningful rather than just by chance?

Well, of course, that's always a concern when you see a study with a lack of a dose responsiveness. There are a few pieces that make us feel that this is a robust result. The first is the magnitude of the result. And again, we're not going to share numbers, but we've said that directionally, it's on par with what's been seen with other agents. This was a well-powered Phase IIb study with approximately 210 patients enrolled over the 3 arms.

The second is we see consistency of data across both the clinical endpoints and the objective endoscopic endpoints. And then third, we see -- we have some mechanistic rationale that we're building that might explain why a TYK2 inhibition at higher doses may actually -- one may lose some of the anti-inflammatory and gain some pro-inflammatory effects at higher doses. So we're going to try to put all of that together. But of course, in the end, the Crohn's disease study will be, we think, definitive in terms of understanding the robustness of the UC data and what that path forward will look like.

This is Teresa. Thank you for the question around MIMRYLO. I'll remind you, it's still early days. So the data is coming in. What I can tell you is that given the fact that this is the first time in 10 years that we really have an agent that is consistently addressing the gold standard of treatment, which is maintaining the hematocrit below 45%.

We've also seen sort of that reflected in the fact that we have NCCN Category 1 for both low risk and high risk. So that bodes very well as we move forward in our access discussions. As you would typically see, we expect Medicare to come on first, followed more by the commercial. But what I can tell you right now is that we see scripts that are going through the system with prior auth, and we're feeling very good about the early conversations that we're having with payers who are clearly recognizing the value that we're bringing to patients with this medicine. And of course, that's reflected in the NCCN category 1 listing. So thank you for the question.

Just a follow-up. Can you comment on the mix between low-risk phlebotomy patients and those that the high-risk patients already on therapy?

Your high-risk patients are defined by patients that have had 65 years and older or have had one thrombotic event. So I mean, I would say that given that it tends to be a larger population, you probably skew a little bit more towards the high risk. But I mean, I would say rather evenly distributed.

[Interpreted] Thank you. Next question, Nomura Securities, Matsubara-san.

[Interpreted] This is Matsubara. My first question is about zaso UC. So dose dependency is still being analyzed in detail. But how does it compare against ENTYVIO? And in terms of safety, is there any problem, for example, TB? For ORZEYFUL, diagnosis rate and the treatment rate improvement, how is it working? So sales started in Japan and China. Do you have any feedback through the education of the physicians in the United States? How is the initial action?

Any further commentary you can give on efficacy, for example, compared to ENTYVIO or anything in the safety profile worth noting? So Andy can comment on that one.

And then the second question on prelaunch activities for ORZEYFUL in the U.S. Any initial feedback from health care practitioners, et cetera? Any detail as we prepare to get the launch underway shortly in the U.S., Rhonda Pacheco to answer that one, please?

Well, Matsubara-san, thank you very much. So again, the efficacy at the 50-milligram dose looks robust and directionally on par with what we've seen for -- in UC for other oral agents. And unlike in areas like psoriasis, the parenteral agents are typically on par as well. So I would say directionally, and again, we'll have a chance early next year to share these data with you on par with what's been seen with other agents. I think we were particularly pleased to see that at both the 50-milligram and the 75-milligram dose, the safety profile for zasocitinib was very consistent with what we had seen previously in our psoriasis and psoriatic arthritis studies at the 30-milligram dose.

Great. I'll jump in here. This is Rhonda. Thank you for the question. I'll start with launch preparation in the United States. We are ready. We are ready across the field, the access and patient support. We have all commercial and medical teams in the field, and we're focused on 3 things. First is education. We're building that awareness of the NT1 true burden and the role of orexin in NT1 patients for patients and HCPs, making significant investments in supporting disease awareness and education. We initiated the non-branded disease awareness campaign in the U.S., and we have reached thousands of HCPs across individual meetings, congress participation and supported educational programs. The feedback has been overwhelmingly positive, and they are ready and excited for ORZEYFUL launch.

The second that we're focused -- the second topic that we're focusing on is access and patient support. Our payers have been engaged pre-approval to support broad formulary coverage. Our specialty pharmacy distribution is ready, and our patient support program is prepared and committed to helping patients gain access to medication at launch. This is an area where we bring real experience because of our rare disease portfolio.

Lastly is diagnosis, which we know is important for this launch, improving the accurate and early diagnosis of NT1, we have been leveraging data, digital and technology that aim to accelerate accurate diagnosis and improve the patient journey. For example, we're pursuing digital and fluid biomarker tools to support diagnosing the NT1 from other sleep-wake disorders. And lastly, partnerships like with EnsoData on developing and validating AI-based PSG algorithms to improve the detection and diagnosis of NT1 during routine sleep lab studies.

Lastly, in bottom line, we are ready. We're building that awareness to activation, which means making sure HCPs and patients are aware of our ORZEYFUL through all competitive channels, and we're meeting our customers where they are through direct-to-consumer initiatives. Thank you for the question.

And Matsubara-san, this is Julie. Let me just add a quick comment about Japan and China. So as I shared during the presentation, we launched in both countries on October 15. So it's only been 2 weeks, but we've -- we're very pleased with the initial response. And in terms of targeting, we are also in both Japan and China, targeting patients who have already been diagnosed and are on treatment first, and then we'll have to work on the diagnosis.

[Interpreted] Thank you, Matsubara-san for the question.

Okay. Moving on to the next question in the line. So I'd like to call on Mike Nedelcovych from TD Cowen.

I have some clarifying questions on zasocitinib in Crohn's and then a question on TAK-360. So in Crohn's, can you remind us why there is greater confidence for zasocitinib relative to ulcerative colitis? And depending on those Phase II data, is it possible you would pursue pivotal trials for zasocitinib only in Crohn's and not in ulcerative colitis? And then just to clarify, what is the reason for the delay that emerged between the 2 Phase II readouts? So those are my zasocitinib questions.

And then on TAK-360, Management had previously articulated some good reasons why marketing 2 different products for NT1 and NT2 made commercial sense. But of course, you've now initiated a Phase II trial of TAK-360 in both NT1 and NT2. So my question is, why did you change course on that front? It seems to me one possibility is that the company wants to put its best foot forward in all indications and likes what it sees so far from TAK-360. Could that have been part of the reasoning?

[Interpreted] Thank you, Mike, for the questions on zaso and CD rationale and then on TAK-360, NT1 and NT2 studies. So Andy, if you could answer those ones, please.

Sure. Thank you very much, Mike. So firstly, why do we -- why mechanistically do we believe that there's a greater likelihood for benefits in Crohn's for a TYK2 inhibitor such as zasocitinib in UC? There are 2 lines of evidence. The first is that agents that signal through TYK2. When you look at medicines that block those agents, they tend to have stronger effects in Crohn's than in UC. And then secondly, when we look at the human genetics, which has been a guidepost for us these years, patients that have heterozygous loss of function in their TYK2 gene are protected from Crohn's, but not from ulcerative colitis. Patients have to have homozygous deficiencies in TYK2 to be protected for ulcerative colitis. So those would be the 2 reasons we think Crohn's has a stronger rationale.

And then the second, you asked about the timing of the 2 trials. There are really 2 reasons that create the separation. The first and most importantly is the Crohn's study is a larger study. The UC study has 3 dose arms and the Crohn's study has 4 dose arms. The second reason is that right now, Crohn's is an incredibly competitive space to enroll trials in. And to be very frank, we've been working with a disadvantage given the experience of investigators with prior TYK2 inhibitors. As we've said all along, zasocitinib is truly a best-in-class molecule. And we think that now the UC data confirm that, and we'll really look forward to seeing the Crohn's disease data.

We'll think, Mike, that having some positive halo behind a TYK2 inhibitor in IBD will help us to really accelerate that Crohn's trial as well. For 360, I wouldn't look too deeply into our decision to run an NT1 study. It's a relatively small proof-of-concept study. We're just, I mean, as you know, we've talked about this many times, we are incredibly enthusiastic about ORZEYFUL and the ORZEYFUL profile, truly believe that it's not just a first-in-class, but it's a best-in-class agent. We're running the Phase II study for 360 in NT1 really just to keep our options open.

Thank you, Mike. Moving to the next question. I'd like to call upon Tony Ren from Macquarie.

Tony Ren from Macquarie. Can you guys hear me?

Yes, Tony, we hear you.

Yes. Okay. Perfect. My first question is on your Claudin 18.2 data presented at ESMO. And then I'll also ask about ORZEYFUL's launch pricing and the strategy. So first, Claudin 18.2. So at ESMO, right, your AstraZeneca presented some data at the -- with their competing Claudin 18.2 at the Presidential Symposium. I think it's probably fair to say that it is generally considered practice changing based on the feedback that I've gathered at the conference. It appears to be slightly ahead of you guys in regulatory time line. They are in the second-line plus setting with a Claudin 18.2 cutoff of 25%. How do you expect to differentiate? Would you say that in a disease setting where the median overall survival is about 10 to 11 months, safety alone may not be a good enough selling point? That's my first question.

And the second one is that you launched ORZEYFUL in both Japan and China. Could you comment on the launch pricing? We recently saw several large European pharmaceutical companies saying that they will carefully consider their ex-U.S. launches because of MFN. And you guys are obviously thinking about this quite differently. So could you explain that as well?

[Interpreted] Okay. Thank you, Tony, for your questions. So the first on our recently announced data for TAK-921 and how we may differentiate versus other Claudin 18.2 ADCs. So Andy can take that question.

And then the second question on ORZEYFUL pricing ex-U.S. in the markets where we've already launched. Julie can take that question.

Thank you, Chris. And then I'll also ask if Teresa may want to add to the 921 discussion. But Tony, thank you very much. We're, I mean, incredibly excited by the data that we presented for 921 at ESMO. And we think that it has -- when you look at all the endpoints, OS, highly significant effects in PFS and overall response rate as well as safety and tolerability, we think that this is a best-in-class profile. Remember that this is an extremely refractory third line plus population. In fact, 30% of the patients enrolled in this study were fourth line or fifth line.

So this is really a very high unmet medical need, very sick patient population. And to see overall survival rates of over 10 months median is really just extraordinary. Remember that this is an Asian study that was enrolled in China and Japan and will be filed and eventually launched in those 2 countries. We don't have the intent of bringing the program into highly refractory settings in U.S. and Europe. Our goal is to rapidly move towards a first-line study, and we're evaluating a number of different combinations with established standards of care chemotherapy regimens as well as now KRAS agents. So we think that this data sets us up extremely well to be highly competitive in the first-line setting.

Yes. And Andy, if I could just add on to that, Tony, thanks for the question. We're actually feeling very confident because when you look at our data, indeed, the safety was something outstanding and very reflective of the mechanism that we have with Fc-silenced linker as well as the fact that we have a TOPO1 payload, which is very strong, very low on the GI tox. So we do stand out there. But the efficacy, when you look at what we delivered in what was a very sick patient population, we're feeling very confident in terms of our ability to compete on both efficacy and safety, and we're looking forward to moving at speed to get TAK-921 into frontline studies. So thank you for that question.

And Tony, I'll take your question about pricing for ORZEYFUL in both Japan and China. So for China, let me clarify that for NRDL reimbursement, there's only one opportunity per year to submit for NRDL reimbursement, and we received approval for ORZEYFUL after that date. So right now, we are selling via the private market. And so we do not have the NRDL listing yet. So we will be submitting that next summer, and then we should have NRDL listing, hopefully, in January of '28. For Japan, we have received pricing in Japan, as you may be aware, and the equivalent in U.S. dollars is roughly about $100,000 on an annualized basis.

[Interpreted] Next question from Wakao-san, JPMorgan.

[Interpreted] This is Wakao from JPMorgan. First, about zaso IBD in our Capital Markets Day. I understand you show our true colors in December at Capital Market Day. Is there a Phase III development strategy for zaso in IBD has not yet been finalized until the Capital Markets Day. How will you reflect that opportunity and its uncertainty in the outlook? Also given the encouraging efficacy signal at the 50-milligram UC, is it fair to say that we should not be overly pessimistic about the lack of dose response?

And second about product performance. Could you provide some more color on the second quarter performance and second half outlook for ENTYVIO and PDT? ENTYVIO delivered strong result in second quarter. What were the key driver of this performance? And do you expect this positive momentum to continue into the second half, giving you confidence in achieving your revised full year guidance? In PDT world, second quarter was weak. What were the main reason for the weakness? What is your outlook for the second half? And how confident are you in achieving your full year guidance?

[Interpreted] Thank you, Wakao-san. So the first question around whether we'll have any further updates on zasocitinib in IBD by Capital Markets Day in December. And again, a question around how we should think about the lack of dose response. So Andy, call on you again for that question.

Next, a couple of product-specific questions on sort of Q2 performance and rest of the year outlook. So first one, ENTYVIO. Perhaps Rhonda can take that one to talk a little bit about the U.S. performance. And then on our IBD portfolio, Ramy can comment on that one, please.

Great. Great. Thank you very much, Wakao-san. And if you could see me, I have a big, big smile because we knew that there would be a lot of questions on the UC zaso data. So maybe if I may, let me dial up for a second and just paint the picture for zasocitinib. So this is a best-in-class TYK2. It's a once-daily conveniently administered oral agent. We've just filed for psoriasis with really truly best-in-class data. We've just completed a head-to-head study against deucravacitinib that shows the strongest PASI 100 data in psoriasis that any agent has ever seen. We are incredibly excited to get this launched in psoriasis.

Next year, we'll have Phase III data in psoriatic arthritis. Our Phase IIb results that we presented last year are very compelling. We have 4 Phase II studies. The UC is the first to read out. We'll have Crohn's reading out at the end of the fiscal year. And then next year, we'll see data from HS and very excitingly, vitiligo, and both of those studies are enrolling extremely well. We are very enthusiastic about the potential for zasocitinib.

Now drilling down on UC and what we'll present at Capital Markets Day. We will not share the UC data at Capital Markets Day. As I mentioned, our intent would be to share the UC and Crohn's disease data sets together, and we'll see those data towards the end of this fiscal year. We're sharing the data today because we were encouraged, to be frank, by the data. It's a complex data set. Any time you have a lack of dose response and a stronger effect in a middle dose versus a higher dose, it creates some complexity.

But given the robustness of those data directionally in line with what other agents have seen, other oral agents and even many parenterally administered agents and the robustness of the nominal p-value, we felt it was important to get those data out there. We think that this will change the mindset around TYK2 and IBD. And in the end, we'll look forward to seeing the Crohn's disease data to see what that overall data set will look like.

Thank you for the ENTYVIO question. A couple of points on ENTYVIO performance. ENTYVIO is performing in line with our expectations, and we remain on track against the plan we laid out for 2026. That is driven by sustained demand growth and a favorable comparison to a softer Q4 fiscal year '25. ENTYVIO is in its 13th year on the market and continues to deliver sustained growth. As you see in Q2, global growth was 2.7% at constant exchange rates. The brand is growing with the market in first line, which is where our strategy is, supported by our continued uptake of the pen formulation across different regions. Specifically in the U.S., again, in line with our expectations with overall demand continuing to grow. So in summary and to conclude, we remain confident in our ENTYVIO's guidance for 2026. Thank you for the question.

So thank you for the PDT question. So I will start with IG first for Q2 IG. Overall, we have a very solid underlying demand that continued to grow by mid-single digits. For the H1 results, it's in line with our expectation. SCIG continued to grow by double-digit growth at 17% growth, supported by our broad differentiated portfolio. For IV, we declined versus the last year first half as a result of the phasing as well as market and price dynamics.

H2, we expect the SCIG, the subcutaneous IG to sustain its strong growth. IVIG growth, we expect it to accelerate, driven by the momentum of the large contracts in the U.S. specifically. And this time, we are continuing to monitor the market because we are in a supply-demand dynamic change emerging. However, we are also balancing our short-term growth of profitability and margin expansion with revenue growth.

For albumin to continue the PDT portfolio, albumin for PDT continue to be a very important product for our portfolio. For the first half of the year, it's impacted by phasing in U.S. specifically and stronger-than-expected cost containment measures in China. China remains our largest market for albumin and the underlying demand remains very positive and strong. We expect China to return to growth in the near term as cost containment policies settle and demand rebounds. At the same time, we are diversifying the growth by building sustainable markets ex-China, securing tenders outside China, where we started to already deliver in and it's contributing to our performance side. Thank you.

Thanks, Ramy, and thank you, everyone, for your questions. Apologies, we ran a few minutes over, but hopefully, you've seen that we've made notable progress in the first half of the fiscal year. And our focus now is on continued disciplined execution, bringing these medicines to patients, supporting access and driving adoption. At the same time, our transformation is strengthening the capabilities and agility we need to lead in every therapeutic area where we operate and sustain long-term growth. We look forward to connecting today's progress with our longer-term ambition at our Capital Markets Day on December 11, where we will share more details on our growth strategy and how we will build sustainable leadership in our core therapeutic areas. Thank you, and have a good rest of your day or evening.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Okay. Let's get started the session with Takeda Pharmaceutical. Before starting this session, for important disclosures, please see our www.morganstanley.com/researchdisclosures website. If you have further questions, please reach out to our Morgan Stanley representatives. So yes, let me start the session with Takeda. The speakers are Andy Plump, Head of R&D; and Rhonda Pacheco from U.S. business Unit Head. Thank you, Andy and Rhonda, thank you for joining us today.

Yes. Thank you.

Great to be here.

Yes. Thank you. Thank you. So before starting our session, I'd like to say great gratitude to Andy. according to a couple of days ago, the press release, you are retiring from the current role. You have contributed more than 15 years at Takeda. And now you have built up huge pipeline franchise. Thank you for your great achievement in the last more than 10 years. And I'm a bit sorry for that.

Thank you very much, Muraoka-san. We've had a long time together. In all the quarterly earnings reports that we've been in together, you've asked me a lot of really hard questions. It's not the reason I'm retiring, but it's an upside. Not have to take your hard questions. but thank you. It's been a privilege to serve in this role for the last 12 years. I have never had anything professionally in my life that's been like this. It's an amazing company, very strong values, rooted in very strong science.

And I'm very confident in our future with Julie, with Rhonda, with our team, with the pipeline that we have, and I know we'll talk about that. I'm around for the next 8 to 9 months. So I'm really looking forward to seeing you through a number of activities and then managing an effective transition.

Great. Great. Thank you. But today, I will ask a lot to discuss the pipeline.

Questions more hard questions...

Thank you. So before -- yes, now Takeda has many pipeline. So it's -- for me, as an analyst for the first time in the last 10 years to discuss a lot of pipeline with Takeda. In the last 10 years, opportunities of talking about pipeline not so much, but now you are in a big inflection point.

So I'd like to ask a lot about pipeline. But before that, so now -- so and you are retiring and Julie Kim, as an CEO, she has taken over the big, big responsibilities from Christopher as well. So it's a big changing phase for your company. And my question is Capital Market Day to be set in December of this year. So for her big opportunities for explaining her new challenge going forward. My question is, so what to be changed from the Capital Market Day? What can we expect to the different directions of your company after the Capital Markets Day.

If I answered your question, then no one would want to come to our Capital Markets Day. So what I'll say is that it's December 11. It will be in Tokyo. It will be an all-day event. And the focus will be really on rolling out the strategy under Julie Kim. So as many of you may have seen from prior disclosures, we look at the future in 2 phases, Horizon 1, Horizon 2. Horizon 1 is about deep investments in the pipeline, deep investments in these exciting launches, continued build of the pipeline and for the most part, low overall growth. Horizon 2 will be a chance for us to really start to take off. And so the goal of the Capital Markets Day will be to show where and how we're going to be focusing in the future. Anything to add?

I think I'm excited to hear what you said, too, is we have that pipeline now. It's in our hands. We've got exciting launches. So Horizon 1, I'm excited about because it's all about head down and execution. And you'll see that and you'll hear that a lot from Takeda these days.

So my simple question is, so maybe the Horizon 1 plus Horizon 2 to be roughly the 5-year time line. What investors expect shorter Horizon 1 and Horizon 2 should be longer and quite meaningful leap from the current. Could you guide us what time line or what's the trajectory of the Horizon 1 and Horizon 2 more -- could you dive into a bit more detail, please?

Yes. Well, I don't think we've gone out there and said that we're expecting a 5-year horizon 1 before. I think our expectation is more rapid to get to growth. And the reasons for that we'll describe on December 11.

I think the big piece that's going to be happening for us is we just launched NINLARO last week. We'll launch ORZEYFUL in the U.S. later this year. And then as we announced today, we expect to launch zasocitinib in March of 2027. And so by mid next year, we are going to have a lot of data from these launches that will inform on the trajectory of Horizon 1 to Horizon 2.

Great. Great. So okay. So we'll get into the respective promising pipeline. So first, about orexin or narcolepsy. So ORZEYFUL it was approved with label in the last month, August. But we need -- we are awaiting the DEA scheduling. What is the time line of DEA scheduling? And what can we expect which class to be designated. My image is Schedule IV, but could you guide us your rationale going forward?

Sure. We got the approval from the FDA, as you said, in August, first week, the DEA has 90 days for scheduling. It brings us in the November time frame, and we're expecting a Schedule IV assigned.

So yes, other orexin molecules was insomnia to [ excess ] Schedule IV. So I think it's quite rational to product to be similar, of course, opposite, but similar model. So Schedule IV sounds quite rational. Is that...

Correct.

Right. Great. So the -- another question is pricing. Of course, you cannot comment right now. I know that, but could you give me some more color or flavor.

Yes. So pricing will be competitive. I think what goes with pricing is access, and we want to get this new standard of care type medicine to as many patients as possible. So I think our focus at launch is broad access, quality access. So physicians can write this and patients can get it. But our pricing will be very competitive in order to do that.

So I guess, so the competitive is mostly the same as the oxybate or slightly premium price to the oxybate my guess is quite -- it doesn't make sense.

It does make sense?

Does it make sense or not?

Yes. It does make sense. Competitive means that, yes.

Yes, great. Great. So yes, okay, scheduling, pricing and marketing strategy. Some investors are still wondering whether your penetration is fast or not because the oxybate -- it has many issues, but very well penetrated in the narcolepsy space. According to some KOLs, I'm not sure. But -- and in opposite, you recently heard, so you expect a quite fast penetration of ORZEYFUL after the launch. Could you give us -- could you guide us what's your expected trajectory or strategy for penetrating or replacing or your strategy going forward?

I think you said competition is well penetrated, but I also think there's a huge unmet need. And when you talk to patients and physicians, right, there's a lot of polypharmacy and 80% of patients that are treated today still have residual symptoms. Why is that? Because they're not treating the core of the disease, the underlying orexin that they're missing.

And so there's a huge unmet need, patients that are cycling, not getting to the full potential of being treated, that's where you see our strategy of really switches early on because these patients just are in need for ORZEYFUL that's treating their underlying cause of the disease in NT1.

So that the switches will come onboard across all different treatments that they're on today. And not only are we focused there, but we also have to focus on diagnosis rates. 50% of is where the diagnosis rate is today for that longer-term growth, that is we need to increase that. So at launch, it will be switches a faster uptake like you're saying, and then to continue that in the longer term is really increasing diagnosis rates to get patients into the top of the funnel.

Have you ever done some kind of market survey or patient survey or recent survey for launching ORZEYFUL -- so their preference of the new treatment. Do you have any such evidence?

We do a lot of market research. We talk to a lot of health care professionals and patients. Even when we got the FDA approval, even social media, these small, small group of patients that are just really, really excited about this online because, again, they haven't had something that treats the underlying cause of their disease. So the excitement is really around that.

And we hear that health care professionals are ready. So the sleep specialists are very excited, again, about something that treats the disease and not just the symptoms. So it's very, very positive. We want to keep that momentum. We just need the DEA scheduling to get going. So we're excited.

Okay. So, but anyway also according to U.S. study as well, the patients professionals are expecting the fast replacement from the current...

Because the cycling and because, again, 80% are residual type symptoms, they're wanting ORZEYFUL. They want that tool in their toolbox and to give it to their patients that are in need for sure.

Combination use would be not to be the majority of the use of ORZEYFUL with oxybate combination use.

Look, I always say we studied in the mono. It works in mono. That's where we'll educate. That's where we'll promote. It's totally up to a health care professional on whether they want to add that, but the switching is what we're going after.

Great. And the other common question on ORZEYFUL is it's twice daily. Of course, I think twice daily would be quite good for that natural symptom of the patients the level of orexin.

I know that. But competitors are highlighting their drug once a daily and competitor is coming from behind and actually a big company recently acquired you follow us as well. So could you guide me -- so once daily, twice daily, the discussions of which one to be better or which one should have some advantage or not. I would like to know that.

Yes. I'll go -- we'll get to you. Look, I think it provides flexibility. And I think our ORZEYFUL just BID, I mean it's so much more than that, too, right? I mean the efficacy you're seeing across this molecule, this drug is amazing and it's so broad. So I'd like to start with that. BID provides flexibility. We studied that way purposely. You can talk about that. But I take it in the morning, if I have something I want to go to that evening, I can delay that second dose, so I can have dinner before I go to sleep, et cetera, or I working late.

And then maybe if I'm having trouble sleeping some night, I take it earlier. There is flexibility in that. Let's -- let's see where the competition ends up. But today, what we have is a very efficacious drug that's BID, and we have numerous molecules coming that can also compete. So I say ORZEYFUL is just the beginning.

Yes. Yes, yes. ORZEYFUL is just the beginning. So my next question is about TAK 360. MT-4/MT-2. The most common question is, when can we see the Phase II readout?

I'll take that one.

Yes. Go ahead.

So we have 2 molecules that are behind where they're called in the clinic right now. You just mentioned [indiscernible], TAK 360, that's in Phase II for IH [indiscernible]. And then we have TAK-495, which is just completing Phase I. We have a third molecule that you'll see entering into our pipeline in the clinic in the next couple of months and then be a very rich activity in the labs, the discovery activity with new molecules.

And they're not tweaks. We're trying to make molecules that are very different pharmacological parameters that we think will play in different indications. We'll talk more about those later. To your question, 360, Phase II data will be later this year. Later this year, and then we're going to be accelerating 495 as well. We hope to have data for 495 next year.

A bit more color of the timing. So your second quarter -- your second quarter earnings is the end of October and your Capital Market Day is December 11.

Which one -- so okay, I'll answer part of your question, which is we won't have data to share in October. Whether we have data to share at the Capital Markets Day, I think, is going to be a function of what we see in those data sets. We're very excited about it and also the competitive landscape. We also -- we've been really -- we work very closely actually this week, Emmanuel Mignot and Yanagisawa, who are the academic fathers of the space are being awarded the Lasker prize here in New York. It's very exciting.

And I say that because we've had a great relationship with the scientific and clinical community. It's a really close connection. And we've really been thoughtful as to how we release data in line with the needs of Takeda as well as the needs of our partners. So whether or not we disclose in December or decide to wait to a scientific congress will be something we'll decide as we get closer.

Scientific Congress. Yes. Okay. Got it. But -- so yes, in terms of 360, so yes, of course, MT-2 is quite important for capital market. But there are some discussions about MT-2, whether you are orexin compounds to be effective whether effective enough to MT-2 population one of MT-1, it's clear. But could you give us some rationale of why you are excited about MT-2?

Sure. Maybe if I dial back up and just talk about the nature of these diseases because for those of you who are close to this space, there are probably dozens of potential indications that one can imagine treating with an orexin agonist. I would bucket these diseases into 2 categories, NT1 and everything else. NT1 is a clear pathophysiology. This is a loss of orexin-producing neurons in the brain.

You give a molecule like ORZEYFUL, which is an orexin agonist back. It's almost like a neurotransmitter replacement therapy. For all of these other conditions, we have a much more mundane understanding of the pathophysiology because there's normal orexin levels. It's a defect in orexin signaling somewhere. And so all of those indications are going to require very different development programs, very different dosing, very different scheduling, and that's something that we're working towards.

And NT2 is an example of that, right? So what the dose level will be, it's likely to be higher. What will be the efficacy profile? Is it going to be curative like we see with NT1? What's the durability of effect? Those are all questions that we have remained to answer. I think we feel very confident based on the data that we've seen from competitors and based from -- based on our own data that we've seen with prior molecules.

Yes. So of course, we need to wait for the readout. But I think the best expected profile of TAK 360 for NT2 is maybe once daily for MT-2 indications. Is my assumptions are quite pretty fair or with MT-2 twice daily to be acceptable what now?

Well, I think -- I mean, again, if I always go back to the science and translating the science, in any of these conditions where you're trying to normalize sleep wake cycle, you want to match normal physiology. And normal physiology is you wake up in the morning, your orexin levels start to rise, you have a good night sleep. Over the course of the day, you're getting more and more tired to combat that tired, your brain makes more and more orexin, it goes higher and higher, that keeps you awake.

And then you go to bed and it goes down again. And so in principle, for any of these diseases in sleep wake, you want to try to mimic that natural pattern with an oral molecule. Doing that with a once-daily dose, that's a very difficult PK profile to match, firstly. And secondly, everybody is going to have their individual differences. So as Rhonda was saying, having that flexibility to dose twice a day, we think is critical in the vast majority of patients. So I would expect, as with NT1 that for NT2, you're going to be better off with the twice-a-day dosing paradigm.

Flexibility is -- got it. In terms of 360, so I'm asking too much about 360, but, you recently have started the NT1 population study. What's the rationale of -- yes. You already got the approval for ORZEYFUL. Why?

Well, so I mean, I say, first and foremost, we think ORZEYFUL is not just a first-in-class, but has every potential to be a best-in-class drug. We're actually running a study that we don't talk too much about in Europe right now, a Phase III study. It's called a randomized withdrawal study. It will be necessary to support registration in Europe.

There's an element of that study that we're adding, which is a higher -- slightly higher dose and this is for ORZEYFUL. So we think between what we have right now and the potential to dose a little bit higher, particularly with that second dose with the flexibility, ORZEYFUL will meet the needs of NT1 patients, right? That's what we think. We're being careful. We want to make sure that we're exhausting all possibilities. Only a very small NT1 study in 360, just in case, keep our options open at this point.

Got it. It's a bit too early to discuss about the pricing of NT2, but NT2 to assume mostly the same pricing, same cost to NT2 population with NT1. I don't think so, but could you -- if you have any more color on the pricing dynamics?

I love answering pricing on like Phase II. Look, it could probably be different where the market is, where the competition is, what the data looks like, all of those factors go into pricing. I think it's still too early to tell. But yes, could it be different? Yes.

Okay. Got it. So moving to zasocitinib oral TYK2. Our congratulations for being accepted by the FDA for your filing. Just a confirmation, the PDF data is March 13, right?

Yes. Yes.

So in mid-March, so you can launch it within your fiscal year ends in March, so within the current ongoing fiscal year.

Correct.

Of course, the pricing is -- you cannot talk. I know that. But yes, [indiscernible] is already on the market, and they are supply quite well. So maybe competitive pricing can we expect like that?

Yes. You know the pricing of [indiscernible]. We know that access is critical for this launch, too, like every launch, but this one even more. So in order to gain access, we will be competitively priced in order to do that, so.

I remember that your psoriasis Phase III data were quite quick, both in efficacy and safety as well. So yes, in the past, investors -- some investors show some concern of the TYK2 is some similarity to JAK inhibitors in terms of the mode of action. But the safety profile was quite different, I understand. But there are still some discussions with investors that psoriasis future to be approved label may some restrictions of the use or some safety warning like that. So what can we fairly expect your safety profile or safety profile in the label going forward? Of course, it's too early, but what's the going forward?

Maybe I'll take it first, and then I'll let you talk about the label and how highly selective we are. And you said it, I just want to reinforce, this is a great efficacy story. I think, too, even if we were talking 6 months ago, it'd be different. Like we have now turned over so many data cards with this molecule, and it just keeps getting better.

And you're right. When we talk to HCP, when you talk to people out there, they want a drug that works, they want a drug that works fast and that it continues to work. And when you look at the data, it's rapid, it's durable. And lastly, I want to talk about is the convenience piece because I do think it matters. And with that profile, I think it's a very strong one to have that will take to payers because we know the access piece. But it starts there. And I'm excited about this molecule.

You can talk about the label and the safety. Now on the safety side, we have to kind of do our job around educating. We've had a few of these education sessions. People are flocking to learn more, and they're excited about it, too. But we are, and I'll let you speak to the selectivity and the label.

Yes. I mean just to accent what Rhonda just said, there's we are a TYK2 inhibitor. There's no activity on JAK. The challenge that we face is that TYK2 and JAK 123 are part of the same family of kinases. And the first molecule that went to market had -- didn't have the efficacy profile that we did and actually was not a selective molecule. And so there's baggage and there's a perception issue that Rhonda is going to have to work through.

We don't -- we haven't seen any safety issues that suggest anything related to JAK. So it would be -- like you said, we have to work with the FDA now along the review period and ultimately towards the label. It will be very surprising if there was any monitoring related to JAK in this label. I think the key is going to be what Rhonda is saying is overcoming these perception issues.

Great. So I think you already have got the 1-year safety data of your psoriasis studies in hand. And maybe you may have submitted that 1-year data to FDA as well. Is that fair to assume?

Yes. So as part of -- one of the reasons that we didn't submit the file to FDA when we finished the 2 Phase III studies is that we had to generate a larger safety base of patients exposed on zaso for a year. We've now completed a full dedicated safety study. Actually, there's great efficacy in that study that we'll present at a future congress. But we now have a very compendium of safety data and again, no JAK-related safety effects.

And even with the 1-year data as well, you have not seen any -- that's right.

That's right. Exactly. Nothing that's new from the safety profile that we've presented.

Great. So the next investors interest beyond psoriasis, so IBD UC/CD indication. Maybe the psoriasis would be the starting [indiscernible]. I know that you have not disclosed the dose precisely about the IBD UC/CD indications. But could you share some more color on the dose -- increased dose UC/CD? And based on the accumulated safety evidence of psoriasis use, can we assume that we should -- or can I think I should not so much concern about the safety profile in higher dosage. IBD indications.

Yes. So maybe just again, dialing up. So I would say 3 buckets of indications for zasocitinib: psoriasis, psoriatic arthritis, great psoriasis data. Psoriatic arthritis Phase III data coming out next year. IBD, I'll come back to that. And then we have 2 additional autoimmune inflammatory indications, vitiligo and HS. Those are both Phase II studies.

There's a lot of rationale for why we should see efficacy. There's a lot of interest in vitiligo in particular. So we'll be very excited to see the results of those 2 studies next year. Now IBD is what you asked. And you were talking earlier about how there's some skepticism around the mechanism. And maybe I'll offer my thoughts and why I'm enthusiastic.

There are 3 levels of evidence that suggests that a TYK2 inhibitor should be effective in IBD, you see in Crohn's. One is that the cytokine inhibitors like IL-23 inhibitors and others, all signal through TYK2, and we know that they're highly efficacious. Two, animal model data; and three, perhaps the most compelling human genetics. 1 in 500 people of Caucasian descent walk around with 90% reductions in TYK2 activities. And they get -- very few of them get Crohn's disease.

They are protected from Crohn's disease, slightly less so, but also ulcerative colitis. We think part of the challenge with the mechanism and part of the reason these perception issues exist is that there have been 2 failed studies with TYK2 inhibitors. We believe that there are 2 reasons for that. One is the dose -- in at least one of the studies, we don't think that the exposures were high enough to what is necessary in IBD. And then the second, we think, is experimental design and operationalization of the study.

Regardless, our trials are ongoing. They'll read out this year. We're starting at the 30-milligram QD dose, which is the psoriasis, psoriatic arthritis dose, and we're going up to a dose that's significantly higher than that. My level of confidence is very high for Crohn's, slightly less for UC based on the genetic data. I think the big question will be competitiveness. That's something we'll have to wait and see. And of course, your question about extrapolating safety. If we go at the 30-milligram dose, I think there's a lot of safety extrapolation. If we go at the higher dose, there's some, but obviously, we'll have to generate that safety database.

And so you said, so by the end of this year?

End of this fiscal year. Fiscal year.

So maybe after the Capital Markets Day.

Definitely after the Capital Markets Day.

Definitely.

Both UC and CD.

Well the UC study is going a little bit faster than the Crohn's disease study. So we'll likely have data from that study first, but we'll disclose data. There are a variety of reasons for doing that, not just Takeda positioning, but in terms of how you run the studies, we'll disclose data from both together.

Both together. In maybe January, March or around that time.

At the end of the fiscal year.

And so in terms of the market potential, so in psoriasis, you already 2 years ago have said $3 billion to $6 billion. Yes, I'll be that. But in terms of the IBD UC/CD indications, what -- can we fairly expect the potential peak sales of your [ zaso ]?

Yes. I'll take that one, but you're not going to like the answer. Right now, we don't have peak sales yet for the IBD. Like you said, the $3 billion to $6 billion is for PSO and PSA. I think we did back a couple of years ago, '24. We're not changing those. I think we feel really good about where we are with zaso in that space. But it's too early to give you a number on the peak sales of IBD. I think we need to see some of this data, too.

Can we expect at the Capital Market Day some update on so IBD potential sales and MT-2 peak sales potential as well?

I think we need to see the data first. I don't want to commit that you'll see that in December. But if it's ready, then we'll do it, but I can't commit to that right now.

Okay. Got it. Sorry, only 1 minute left, so I ask too much about the franchisees. So briefly, Innovent products. I think -- so '26 to '27 or first half '27 is a year of launch of the 3 key products for use. But after the launch of the zaso in March, after that, so yes, I was -- I'm a bit worried about the lack of the data readouts of your pipeline, but Innovent products to maybe fit well. Could you give me -- give us on the time line of the data readout of Innovent products or other you highlighted compounds in basically in '27?

Yes. Well, so we'll have a lot -- I mean it will be a steady flow of data readouts. So next year, you'll have psoriatic arthritis end of this year. We talked about 279 IBD. Next year, you'll have 279 zasocitinib in HS and vitiligo. We have a molecule that we haven't talked much about, which is [ ADZYNMA ], which we're studying in acute ischemic stroke Phase II study. It's very exciting.

We'll have data from that program next year. For the Innovent programs, we'll have continual data coming out from China, particularly for TAK-928 and TAK-921. And then the following year, we'll have Aricept, mezagitamab, fazirsiran. So this is a really steady stroke. It's not just these 3 launches, but it's a pipeline that can sustain behind it.

Great. So many, many many, many...

Many, many years. It will be fun. Yes.

So, great [ interesting ] point to come. Yes. Okay. Thank you very much. So now time is up. Thank you very much.

Thank you.

Thank you.

[Interpreted] Thank you very much for joining us today despite a very busy schedule for the FY '26 Q1 earnings announcement by Takeda. My name is O'Reilly, and I'm the Head of IR. I'll be facilitating the discussion today. Thank you for this opportunity. And first of all, allow me to explain about the language setting. [Operator Instructions] Before starting, I'd like to remind everyone that we will be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause our actual results to differ materially are discussed in our most recent Form 20-F and in our other SEC filings.

Please also refer to the important notice on Page 2 of the presentation regarding forward-looking statements and our non-IFRS financial measures, which will be also discussed during this call. Definitions of our non-IFRS measures and reconciliations with comparable IFRS financial statements are introduced in the appendix of the presentation. Now we would like to start the presentation. We have President and CEO, Julie Kim; Chief Financial Officer, Milano Furuta; and President, R&D, Andy Plump. They will do the presentation, which will be followed by the Q&A session. We will get started. Julie, please go ahead.

Thank you, Chris. Thank you for joining us for today's earnings call focused on the first quarter of fiscal year 2026. We delivered a solid start to the fiscal year, and our performance this quarter demonstrates steady progress against our strategic priorities, keeping us firmly on track to achieve our full year guidance. These achievements reflect our continued execution against the 2-Horizon strategic road map we shared last quarter, which will position us for accelerated growth in the years ahead to expand impact for patients and set the stage for sustained value creation.

Today, I will outline this quarter's progress against our priorities. Financially, we delivered a solid quarter and made steady progress against our fiscal year '26 priorities. In the first quarter, core revenue declined slightly at 0.5% at constant exchange rate, or CER, in line with our expectations as momentum across our core in-line brands and existing new launch brands largely offset anticipated headwinds in our mature portfolio.

Core operating profit declined 0.5% year-over-year at CER, reflecting the continued investment behind our upcoming launches and exciting late-stage pipeline, which we are partially offsetting by savings generated through our transformation program. And core EPS was JPY 154, a decrease of 11.8% at CER, mainly due to a favorable tax position in the prior year. Milano will walk you through the financial dynamics in more detail shortly, but the key takeaway is that we are well on track towards our full year guidance.

This quarter, we had strong execution across all Horizon One priorities. We are ensuring the resilience of our existing portfolio with our core in-line brands growing by 2.3% at CER. We also continue to execute against our transformation program. As an example, we have largely completed the implementation of our international business unit, which is bringing leadership and teams closer to patients and customers and supports more simplicity, speed and efficiency.

We'll do all of this without sacrificing quality to help us move at pace to bring life-transforming medicines to patients. Takeda's consistent and effective execution of our enterprise transformation is enabling us to fund our launches and advance our pipeline. It also represents a fundamental change in how we work today and how we will grow as a company in the future.

We also made excellent progress across the pipeline this quarter. We are pleased to have received our first approval for oveporexton in narcolepsy type 1 under the brand name ORZEYFUL in China, and approvals in U.S. and Japan are key milestones expected in Q2. I will speak more about the important milestones and progress towards launch for ORZEYFUL, rusfertide and zasocitinib on the next slide. In oncology, we presented TAK-928 data at ASCO in first- and second-line non-small cell lung cancer.

And we initiated a Phase III study of elritercept in first-line anemia-associated MDS. Taken together, our 3 priorities for FY '26 remain firmly on track, continue advancing preparations for the successful launch of ORZEYFUL, rusfertide and zasocitinib, progress the next wave of our pipeline and continued execution of our transformation program to unlock new capabilities and efficiencies.

We continue to build the foundation for our future growth by preparing to bring new medicines to patients. With the first ORZEYFUL approval obtained in China. We eagerly look forward to bringing our first-in-class orexin agonist for narcolepsy type 1 to patients in the U.S. and Japan as well, with launches expected in the second half of 2026. ORZEYFUL has delivered transformative efficacy across a broad range of NT1 symptoms.

At the SLEEP 2026 meeting, we presented additional ORZEYFUL Phase III data, reinforcing the potential of this medicine to establish a new standard of care by improving measures of daily function, cognition and nighttime sleep in patients with narcolepsy type 1. Rusfertide, our potential first-in-class hepcidin mimetic for polycythemia vera has demonstrated rapid, stable and durable hematocrit control while reducing patients' reliance on phlebotomy. Rusfertide has obtained U.S. FDA priority review, and we expect a U.S. launch also in the second half of 2026.

Following Protagonist's opt-out from U.S. co-commercialization, we are excited to have sole responsibility for commercializing rusfertide globally, and we are committed to maximizing its growth potential and impact on patients. Turning to the third of these transformative medicines, zasocitinib is our potential best-in-class oral treatment for psoriasis, delivering rapid and durable skin clearance in a convenient once-daily pill with no fasting restrictions.

We are on track towards launching in the U.S. in the first half of 2027. Our confidence in its profile is stronger than ever. In our recent head-to-head Phase III psoriasis study versus deucravacitinib, zasocitinib demonstrated statistical superiority for all primary and key secondary endpoints with more than 35% of patients achieving PASI 100 or complete skin clearance at week 16. We also shared new data this month from the pivotal Phase III psoriasis studies, demonstrating that zasocitinib achieved consistent high rates of skin clearance across the body, including hard-to-treat and high-impact sites.

Andy will talk more about this in a few minutes. Importantly, we are not just generating compelling data. We are continuing to lay the groundwork for successful launches. For ORZEYFUL, we have had Medical Science Liaisons in the field for more than a year. We've engaged payers and KOLs, and we've set up specialty pharmacy and patient support programs to facilitate an exceptional patient experience.

For rusfertide, we are building HCP awareness of the importance of sustained hematocrit control and leveraging our established hematology commercial infrastructure to ensure we're ready for a successful launch. For zasocitinib, payer discussions and broader prelaunch preparations are already underway, supporting our ambition not only to gain market share, but also to expand the oral treatment segment. Our efforts are planful.

We believe they will enable us to ensure these transformative medicines will reach patients as quickly as possible, delivering on our commitments in Horizon One and positioning Takeda for accelerated long-term growth. These milestones reinforce the depth of our late-stage pipeline and reflect the sustained disciplined commitment we have to faster AI-enabled discovery and development, strong market access and best-in-class scientific, medical, manufacturing, technology and commercial capabilities.

Today, we are in Horizon One and fundamentally transforming Takeda from within. This includes optimizing our operations, strengthening our competitiveness and successfully launching new medicines that will become our future growth drivers. As I just shared, this phase is progressing well through our launch preparation, pipeline progress, core in-line brand resilience and execution of our transformation. To provide an additional example, we recently announced a landmark collaboration with the Indonesian government to build plasma operations in the country, starting with establishing plasma donation centers and assessing the feasibility of potential future manufacturing capabilities.

Partnerships like this support the growth of our PDT business and the competitive resilience of our core in-line brands while reinforcing our commitment to a sustainable global plasma ecosystem. Throughout this period, we are committed to a clear set of performance measures, returning to top line growth, protecting our core operating profit margins while making substantial growth investments and improving our return on equity to above 5%.

The entire Takeda team is working diligently to execute on our priorities and establish a strong foundation in Horizon One. Every milestone we accomplish reinforces our path of progress towards Horizon Two growth acceleration. Our employees' relentless dedication and discipline will continue to set the stage for sustained value creation for patients and shareholders. With that, I will hand the call over to Milano to walk through our first quarter financial results in more detail.

Thank you, Julie, and hello, everyone. Let me walk through our financial highlights for Q1 of fiscal year 2026. Overall, our Q1 results are on track towards full year guidance. Revenue was JPY 1.22 trillion, an increase of 10.2% on an actual FX basis or a decline of 0.5% at constant exchange rates or CER. Core operating profit was JPY 358.9 billion, up 11.5% at actual FX or minus 0.5% at CER, while reported operating profit was JPY 201.4 billion.

Core EPS was JPY 154 with an 11.8% decline at CER as expected, mainly reflecting tax favorability in the prior year. Reported EPS was JPY 72. Operating cash flow was lower than prior year, reflecting changes in working capital related to our trade receivables factoring program. Adjusted free cash flow also reflects a payment of USD 200 million to Protagonist following the decision in April to opt-out of our co-promotion agreement for rusfertide.

As Julie highlighted, this means that Takeda now holds exclusive development and commercialization rights for rusfertide globally. Overall, we are on track to deliver JPY 650 billion to JPY 750 billion free cash flow for the full year. Slide 10 shows a revenue bridge versus prior year. At CER, core revenue declined 0.5% as growth from core in-line brands and new launches largely offset the decline from LOE and mature products, which includes the continued generic erosion of VYVANSE in the U.S.

Core in-line brands represented 58% of total revenue and grew 2.3% at CER, which is on track with our expectations for Q1. Our largest product, ENTYVIO, remains resilient with 4% growth at CER, while immunoglobulin and albumin were both impacted by phasing in the U.S., which was within our expectation. Our new launches category is still small today, only 4% of total revenue, but it is growing strongly at 22.6% at CER, supported by FRUZAQLA, LIVTENCITY, ADZYNMA, QDENGA.

We're excited at the prospect of introducing new products to this category with the potential launches of ORZEYFUL and rusfertide later this year. Finally, FX was a big positive to our top line, adding JPY 118.2 billion to deliver 10.2% growth at actual exchange rates. Slide 11 shows a bridge for core operating profit. Consistent with our priorities in Horizon One, we have positioned fiscal year 2026 as a year of growth investments funded by savings from our transformation program.

The transformation program is firmly on track, as Julie commented earlier. However, many of the initiatives were implemented at the end of the quarter, meaning the savings amount captured in Q1 results is still relatively limited. All the high priority growth investments are on track, including launch readiness for ORZEYFUL, rusfertide and zasocitinib as well as progress of late-stage development programs such as TAK-928 and TAK-921. We continue to demonstrate cost discipline alongside targeted investments.

And finally, you can see in the chart that gross profit was positive in Q1, primarily driven by favorable FX variance in cost of goods as well as a one-time divestiture-related milestone. Next, reported operating profit on Slide 12. As you can see in this chart, the 2 main factors impacting year-on-year performance were lower amortization of intangible assets, mainly due to the completion of VYVANSE amortization in January 2026 and higher restructuring expenses related to the transformation program.

FX also provided a tailwind, resulting in 9.1% growth versus prior year at actual exchange rates. Slide 13 shows our full year fiscal 2026 outlook, which is unchanged from May. And our Q1 performance was fully on track towards our targets for this year. I will close my section of the presentation by reemphasizing our commitment to strict financial discipline through our 2 growth horizons.

In particular, during this Horizon One, our focus is on returning to revenue growth, protecting operating profit, improving reported profit and ROE and maintaining strong adjusted free cash flow. I look forward to sharing our ongoing progress towards these goals. Thank you. And I'll now pass to Andy for updates on the pipeline.

Thank you, Milano, and hello to everyone on today's call. I want to frame this quarter simply. Takeda R&D is ready to convert pipeline progress into commercial performance that supports our 2-Horizon growth strategy. Over the coming months, we are poised to launch 3 transformative medicines: ORZEYFUL, rusfertide and zasocitinib, each with the potential to redefine the standard of care in its field and together setting Takeda on a new growth trajectory.

Let me begin with ORZEYFUL, which I believe is one of the most exciting stories in neuroscience today. Narcolepsy type 1 is a lifelong disorder caused by the loss of orexin signaling, leading to disabling daytime and nighttime symptoms. At the 2025 World Sleep Congress, we presented groundbreaking results from 2 Phase III studies that met all 14 primary and secondary endpoints, demonstrating statistically significant and clinically meaningful improvements.

ORZEYFUL delivered transformative efficacy across the broad disease spectrum, including daytime symptoms like excessive daytime sleepiness and cataplexy as well as nighttime symptoms, cognitive symptoms, functional improvements and quality of life. ORZEYFUL doesn't just manage symptoms, it addresses the underlying orexin deficiency in NT1, offering patients a single, well-tolerated oral therapy that could restore how a majority of NT1 patients feel and function.

We are on track to bring the first and only orexin agonist to patients living with NT1. As Julie mentioned, we have received our first approval in China, and we eagerly await decisions in the U.S. and Japan this quarter. At SLEEP 2026, we presented additional Phase III data that I would describe as remarkable with improvements spanning daily function, cognition and nighttime sleep. Let me share a few of the highlights.

Using the functional impacts of narcolepsy instrument, or FINI for short, we saw significant improvement across all functional domains with p-values below 0.0001, including benefits to cognitive functioning, social activities, everyday activities and daily responsibilities. These important benefits led to significant gains in work productivity, activity impairment and quality of life.

On cognition, we saw improvement versus placebo in attention, memory and executive function, each with a very significant p-value. On nighttime sleep, I want to dwell for a moment on the striking REM latency finding. REM latency is the time it takes to enter the first REM sleep stage after falling asleep. REM sleep disturbances can manifest as sleep paralysis, sleep-related hallucinations and sleep disruptions.

At baseline, our NT1 patients had a mean REM latency of about 50 minutes against a healthy control value of roughly 130 minutes. ORZEYFUL shifted mean REM latency into the normative range across all treatment groups in both the First Light or 3001 study and the Radiant Light or 3002 study. This objective shift in sleep is unprecedented. To keep it simple, we are showing data from the Radiant Light study. Both trials produced similar results. As you can see, the objective REM shift is corroborated by the subjective assessments.

We measured the subjective effects on REM [ linked ] sleep using the NSS-CT or Narcolepsy Severity Scale for clinical trials, a validated instrument used in narcolepsy. ORZEYFUL significantly reduced hallucinations and sleep paralysis in all treatment groups. And it did so with no clinically meaningful disruption to sleep architecture. In practical terms, we are significantly improving, often normalizing a patient's day and night.

Now let me turn to zasocitinib, our next-generation, highly selective and potent oral TYK2 inhibitor. Here, too, the data speak for themselves. In our Phase III head-to-head psoriasis study, zasocitinib significantly outperformed deucravacitinib. At week 16, more than 35% of zasocitinib-treated patients achieved complete skin clearance as measured by PASI 100. We have 2 key takeaway messages from these top line results. One, this was a well-run trial with deucravacitinib having data consistent with past Phase III trials.

Two, this is the best 16-week efficacy in psoriasis that we have seen from a pill. Zasocitinib is poised to be a leading oral option with a fantastic efficacy and safety profile. Full details will be shared at a medical meeting this fall. What gives us additional confidence is the performance in the hard-to-treat high-impact areas like psoriasis of the scalp, palms and soles as demonstrated here by the high rates of skin clearance in the Phase III LATITUDE programs as well as statistically significant benefits to nails.

These are the places where psoriasis can have greatest day-to-day impact for patients who are among the hardest to treat. The new psoriasis data continues to add to our library of outstanding Phase III results. I'd like to take a moment to remind you that zasocitinib is far more than just a psoriasis story. As you can see here at the top, zasocitinib has studies underway across a broad range of immune-mediated diseases like Psoriatic Arthritis, Crohn’s Disease, Ulcerative Colitis, Vitiligo, and Hidradenitis Suppurativa.

Zasocitinib is a molecule we believe could redefine what is possible with a convenient once-daily oral therapy. We anticipate a Phase II data readout for Crohn's disease and ulcerative colitis at the end of our fiscal year 2026. Our orexin franchise continues to advance. ORZEYFUL has initiated the important 3003 Phase III study, which will support filing in Europe. This potentially label-enabling trial will, for the first time, generate clinical data on direct switches from polypharmacy to ORZEYFUL.

In addition, for the small number of patients who may benefit from dose escalation, the trial will include a higher dose option. Beyond ORZEYFUL, we are advancing TAK-360 in narcolepsy type 2 and Idiopathic Hypersomnia and anticipate Phase II data later this calendar year.

The third of our imminent launches is rusfertide, a first-in-class hepcidin mimetic for polycythemia vera. Rusfertide delivers rapid, stable and durable hematic control, addressing a major unmet medical need in PV. It is filed in the U.S. with an EU filing targeted later this fiscal year. We have an August PDUFA date and anticipate launch immediately thereafter.

Now I want to be clear that our story does not end with these 3 assets. They are the starting acts of the most robust late-stage pipeline in Takeda's history. And as we continue through Horizon One, we will advance the next wave of pipeline progress with key readouts and milestones.

As Julie shared earlier, in oncology, elritercept has started 2 Phase III trials in first- and second-line myelodysplastic syndrome and will soon start a pivotal trial in myelofibrosis. We presented important updates at ASCO in June for TAK-928, our PD-1/IL-2 alpha-biased bispecific fusion protein. First, in patients with second-line plus IO-resistant non-squamous non-small cell lung cancer, an area of great unmet need, we showed a 42% overall survival rate at 2 years. We are planning for a pivotal Phase III in this refractory population later this fiscal year. In first-line non-small cell lung cancer patients with less than 50% PD-L1 expression, we were excited to see outstanding early data for TAK-928 in combination with chemotherapy with favorable safety data.

We are looking forward to additional data cuts in the coming months as the trial matures. TAK-921, also known as arcotatug tavatecan, is an oncology program that has received less attention but remains highly promising. Strong progression-free survival data was announced from our partners at Innovent in June from a regional Phase III trial in third-line gastric cancer. We plan on filing in Japan in fiscal year 2027 using mature overall survival data from this trial.

In PDT, TAK-881, our 20% next-generation facilitated [ subcu Ig ] is advancing towards a U.S. filing in primary immunodeficiency and filings in multiple indications in Europe and Japan. Let me close where I began. What you're seeing from Takeda R&D is the result of our sustained focus on pursuing science where we have the depth to lead. and commitment to disciplined choices that allow us to advance programs with the most meaningful patient potential.

ORZEYFUL, rusfertide and zasocitinib are the leading edge of that strategy. And behind them is a pipeline with the depth to sustain this momentum well into the future. If we take a step back, we anticipate U.S. launch of ORZEYFUL in the second half of 2026, rusfertide launch in the second half of 2026 and zasocitinib launch in the first half of 2027, 3 potential new standards of care launching in close succession, 2 of which carry breakthrough and Fast Track Designations. This is the launch cadence that underpins our confidence in Takeda's growth trajectory.

I have never been more confident in the science, and the team behind it and in our ability to improve patients' lives and build a healthier world for generations. I look forward to sharing our continued progress with you. Thank you. And with that, I'll turn it back to Julie to wrap up the presentation. Julie?

Thank you, Andy. As you have heard, the momentum across our R&D organization is translating directly into tangible milestones with the goal of bridging us from transformation to growth acceleration. We are also dedicated to operational discipline, and our enterprise transformation is already starting to unlock capital to reinvest in our pipeline and launches. In summary, we are delivering on our priorities in Horizon One towards a clear set of operational and financial goals. These milestones will enable us to secure a strong foundation that will advance us to Horizon Two, an era that will be defined by accelerated revenue growth, structural margin expansion and sustained value creation. We know our shareholders are eager to discuss more details of this path forward, and I am pleased to announce that we will host a Capital Markets Day in Tokyo on December 11, 2026.

At that event, the executive team and I will provide a deep dive into our pipeline progress and mid- to long-term financial ambitions in-line with our 2-Horizon strategic road map that will guide our growth through the end of the decade and beyond. We have the right strategy, a highly competitive portfolio and a united, deeply committed global team. I am proud of the progress we made this quarter, and I am incredibly energized by the trajectory we are on. With that, I'll now turn the call over to Chris for Q&A.

[Interpreted] I would like to take questions from the participants.[Operator Instructions].

The first question is Yamaguchi-san from Citigroup. Please unmute and ask your question.

Yamaguchi from Citi. I have 2 questions. The first question is the overall earnings. And Milano-san mentioned gross margin on the Q1 seems to be relatively high compared to full year guidance. And you talked about some mix -- product mix, but also you talked about some divestiture related things. So how much is contributing this divestiture thing? And is this just a one-off or not? So can you give me a comment on those gross margin prospects, Q1 and full year?

The second question is that you may not have answered yet, but ORZEYFUL has been -- is now launched approved in China and also will be launched -- will be approved in the U.S. and Japan. Can you give me the overall strategy, how you're going to position this drug compared to the current therapy? Are you going to add on or are you going to replace? Are you going to take the new patients? Or are you going to take the share from the existing patients? How about the pricing strategy? So if you have any kind of general strategy on a global basis on ORZEYFUL, please let me know. Those are 2 questions.

Thank you, Yamaguchi-san. So the first question on breakdown of gross margin performance. So Milano can take that. And then the second question on ORZEYFUL as we prepare for global launch, any additional commentary on positioning, where we'll get the patients pricing, et cetera? Julie, you can comment on that one. Milano?

[Interpreted] Thank you very much, Yamaguchi-san, for your questions.

I think according to the several points Yamaguchi-san mentioned, I'd like to give you a response. As you mentioned, the gross margin in this quarter compared to the same quarter last year by about 1.4 points, visibly, there was an improvement observed. And actually, the impact from the product mix was more or less neutral. And you also mentioned one-time factor. That contribution was relatively small.

It is divestiture-related technology transfer, which was completed. And as a result, we had a one-time milestone gain or income that impacted us the reduction of cost of sales. And however, it is a small portion of Q1, and it is much smaller in the full year. Therefore, in the full year basis, it is almost negligible. And actually, in the Q1 for the gross margin enhancement, PDT contributed most greatly. There was a transactional FX. In this quarter, it worked in a positive direction.

And it is because of past year's FX levels. The euro against the U.S. dollar was appreciated. As a result, PDT cost of goods improved. And regarding your question about the full year outlook, we have just finished Q1. And in May, we mentioned the 65%. And based upon the FX movement moving forward, we'll be giving an update as it's necessary. But at the moment, we are maintaining the 65%.

Thank you, Yamaguchi-san, for the question about ORZEYFUL positioning. So let me share a few thoughts with everyone on this. First, just a quick reminder why we're so excited about ORZEYFUL. It is the first-in-class and potentially best-in-class orexin agonist designed to treat the underlying orexin deficiency that causes NT1. And as you saw from the information that we've shared previously and Andy shared on the call today, the efficacy across broad disease spectrum is really impressive.

And so we do anticipate that ORZEYFUL will redefine the standard of care in NT1. So in terms of how we expect ORZEYFUL to be used, we studied it as a monotherapy. So that is our anticipation that ORZEYFUL is an effective monotherapy treatment. In terms of where the patients will come from, I would say there's 2 sources. First and foremost, we will be addressing the patient need for individuals who are already diagnosed with NT1 and already on therapy.

That will be the initial source of growth for ORZEYFUL. The second source of growth will come from improved diagnosis. This will take a bit longer time in order to drive better diagnosis, but that would be the second source of growth. And then I think your third question was on pricing for ORZEYFUL. So obviously, we don't share pricing at this point ahead of launch. But our -- in general, our approach to pricing is to ensure appropriate value recognition for the transformative nature of the medicine, but at the same time, support fast access as this is a significant breakthrough in treatment option for individuals with NT1. Thank you.

[Interpreted] Next question from Morgan Stanley, Muraoka-san. Please ask your question.

[Interpreted] This is Muraoka, Morgan Stanley. First question is about 360. 360 data presentation, will that happen before the Capital Markets Day or will happen at the same time as the Capital Market Day? So 360 NT1 Phase II has actually started. Can you please talk about the background? Do you want to have flexibility in terms of pricing strategy? Or do you feel that once daily is going to be necessary? What is the background or the reasoning? That's my first question.

And the second question is Zaso UC/CD , how the information will be shared? I heard information will be shared at the end of the year. And is this announcement going to be for both UC and CD together? And is it going to be in the form of press release? And can we expect this information maybe during the earnings announcement for the third quarter? How do you intend to share this information? That's the second question.

Thank you for the questions. So the first on TAK-360 data disclosure timing, would that be ahead of the Capital Markets Day in December? And then what is the positioning or the background behind studying TAK-360 in narcolepsy type 1? And then the second question on timing of zasocitinib UC and CD data and also how that data would be presented? Will you announce the results of both studies simultaneously? So both of these questions, I'd like to call on Andy to comment on those, please.

Great. Thanks, Chris, and thank you very much, Muraoka-san. This is Andy Plump. So firstly, with respect to TAK-360, -- so as I'll just remind everybody, the TAK-360 is in the midst of 3 ongoing Phase II studies, one in idiopathic hypersomnia, one in type 2 narcolepsy and then recently started one in type 1 narcolepsy. In terms of timing for the former 2, IH and NT2, the study design is such that is built around an adaptive design that allows us to rapidly pivot and explore both dose and dose regimen. We're testing both once a day and twice a day doses.

So in such a design, we don't have a clear end date. We will see data from that trial this year. The exact timing and whether it's available for the Capital Markets Day in December remains to be determined. In terms of the rationale for starting TAK-360 in type 1 narcolepsy, first, I'll say that we are extremely confident and you've seen the data for ORZEYFUL. We believe that ORZEYFUL is not just a first-in-class, but a best-in-class agent for type 1 narcolepsy.

With that said, we're at the very front end of understanding what orexin agonist can do across a broad range of diseases. And so our interest is to continue to learn more and to continue to explore. With respect to zasocitinib and IBD, both the UC and Crohn's disease trials are going well. We expect to have data by the end of this fiscal year. In terms of how and where we present those data, that's still something that we're sorting through. Thank you.

[Interpreted] Next is Matsubara-san from Nomura Securities, please.

[Interpreted] This is Matsubara from Nomura Securities. I have 2 questions. First is about ENTYVIO. In the first quarter, CER 3.8% increase was observed, and I believe [ SC ] contributed a lot. And compared to the last year, I think the customer base have been expanding. But what is the immediate situation right now? And what is the outlook? And next is the rusfertide, PDUFA is approaching in August. And regarding your pricing strategy, as you have discussions with the physicians, -- so how do you think about your pricing strategy? And how about your view of the [ patient ] burden in terms of pricing?

In the first quarter. So any comments on sort of prescription trends, how the performance is going for ENTYVIO? And then the second question on rusfertide, in particular, how you go positioning versus phlebotomy in terms of pricing strategy. So I think both of those questions, Julie, I'd like to ask you to comment on those, please.

Thanks for the questions, Matsubara-san. Let me tackle ENTYVIO first. So when we look at ENTYVIO, as you know, it's been on the market for over a decade now, and we're pleased that we continue to be able to grow ENTYVIO. It's still the #1 prescribed brand in IBD overall, particularly with the first-line leadership in UC. And when you look at the performance in the U.S., I would say a couple of things.

Although sales were down in Q1 year-over-year at constant exchange rate, we do see overall demand growth. The decline is due to pricing mix and lower days on hand. When we look at the growth of pen, we continue to see very strong growth of ENTYVIO PEN in the U.S. And so we're pleased with that continued progression.

For our markets outside of the U.S., here, we continue to see strong growth with 6.7% growth in Europe, 10% in Japan and the rest of our intercontinental markets at just about 36% growth. So again, very strong performance for ENTYVIO, driven by ENTYVIO subcu or the pen across all of our markets. So for the full year, we do expect to be able to hit our guidance.

Your second question in terms of rusfertide pricing. So again, we won't share details of pricing at this point. And I'll just reiterate that our approach to pricing is to make sure that we can receive appropriate value recognition for rusfertide, but also allowing rapid access for patients. So we will balance that as we look to finalize pricing.

For the next question, I'd like to call on Mike Nedelcovych from TD Cowen.

I have 2. My first is actually on mezagitamab. Back in December 2024, you laid out a peak sales ambition in ITP and IgAN of USD 1 billion to USD 3 billion. Have there been any developments in either mezagitamab's development or in the competitive landscape that make you more confident in one or the other end of that range? And are there any indications being explored that could be added to this target in the near future? So that's my first question.

And then my second question is on the risk of ENTYVIO biosimilars in the U.S. What's the road map from here to your estimated 2032 time line? What is the next step that we should be monitoring? And is there any ENTYVIO PEN IP that could be -- that could extend exclusivity further than 2032?

Great. Thank you, Mike. So the first question on how we're progressing with mezagitamab and thoughts on recent developments in these markets. I think Andy can take that question. And then the second on biosimilars for ENTYVIO and sort of route from here to 2032 in terms of biosimilar entry and whether the pen gives us any extended IP. Julie can answer that question, please.

Mike, thank you very much. This is Andy. So as you know, we have 2 ongoing Phase III studies for mezagitamab. One is in third-line ITP and the other is in IgAN. We just recently started a Phase II program in antibody-mediated rejection. So we have 3 indications that are going rapidly with mezagitamab. We do continue to look at additional indications. So stay tuned. I think the -- to your question, the biggest development for us recently has been the recognition from our long-term extension data from our Phase Ib/II proof-of-concept study that with short-term dosing, we're seeing a very durable effect.

And we presented data, and I think I've shared it in previous earnings calls that with up to 6 months of therapy, we see sustained activity on clinical endpoints up to 2 years. So this is really exciting. The confidence we have that this is a real effect and can be -- and relates back to the underlying pharmacology of the drug and the biology of this disease, we think is real. So we actually made an adaptation to the Phase III design.

Initially, the administration schedule was going to be 6 months off (sic) [ on ], 6 months off. We've now decided to administer mezagitamab for 6 months and then track patients thereafter to the primary endpoint at 1 year and at 2 years. So we believe we have a product that not only is going to be differentiated in terms of its safety and efficacy, but also in terms of its administration schedule.

Thanks, Mike, for your questions. And let me just add a quick comment because I think you did also inquire about peak sales estimates for Meza. So we're not changing any peak sales at this point. But when we get to the Capital Markets Day in December, we will provide peak sales based on current assumptions and current landscape. So hold until then for that information.

In terms of your second question regarding ENTYVIO and timing in relation to biosimilar entry. So our time frames here have not changed. So when you look at the U.S., because I think your question was specific to the U.S., we expect it to still be roughly 3 to 5 years in litigation. We will defend our IP positions. We feel very good about our IP position. And so this is something that we will continue to provide updates on, but no change in overall time line.

Thank you Mike. And so for the next question, I'd like to call on Miki Sogi from Bernstein.

I have 2 questions. The first one is to Andy about IBI-363. So on the Page 23, I see that you have achieved the proof of concept of this product for second-line non-squamous non-small cell lung cancer and first-line non-small cell lung cancer. So are these the data that we have not seen? And then we are also -- we should be expecting to see the data at ESMO this year? That's the first question.

Second question is about the new product launches of oveporexton and rusfertide. I was -- to be honest with you, I'm a little bit surprised that you didn't really mention any commercial launch preparation during this -- the presentation despite the fact that launch or approval is imminent. And I'd like to see what are the key operational KPI that you are currently thinking of for these product launches. And hopefully, we will get the update on that later on.

Thank you, Miki. So the first question on TAK-928 POC achievements as we've marked on this slide. So Andy can provide some color on that. And then the second question, ORZEYFUL, rusfertide launch preparation, what the operational KPIs will be, et cetera. Julie can comment on that one, please.

Great. Thank you, Miki. So just to remind everybody, IBI-363 or what we now call TAK-928 is our PD-1/IL-2 alpha-biased bispecific protein that we've partnered with Innovent on. We're pursuing multiple indications in parallel. We've already started a Phase III global program in IO refractory second-line squamous non-small cell lung cancer. And to your question, Miki, we now have very encouraging Phase I/II data out of our partners work at Innovent in both first-line non-small cell lung cancer and also second-line adeno or non-squamous non-small cell lung cancer.

So those data were actually presented by Innovent at ASCO, and I can just provide some high-level summary information. So firstly, in the refractory setting for patients with non-squamous or adeno non-small cell, we've seen really striking overall survival data. So 42% overall survival data at 2 years. And of course, it's difficult to compare study to study, but this is a population that at 2 years has an overall survival rate of approximately 20%. So we're very excited to get that Phase III study going.

And then, of course, the largest population is going to be in frontline we had data that was presented -- we have maturing data that was presented at ASCO by our partners at Innovent that suggests response rates of upwards of 80%. So we'll continue to track maturing data, but we're preparing to start that Phase III study later in this fiscal year.

Andy, I have a follow-up question on the first-line. I believe that the data that was presented at ASCO was dose escalation or dose selection phase and you are running or Innovent is running the dose expansion phase, which is actually hit -- the head-to-head against that KEYTRUDA plus chemotherapy, I believe. And I just wanted to see that if that dose expansion phase that with [ comparator ] data will be presented at ESMO. And -- so your part you're referring to doesn't really include that data.

Yes. So thank you very much. So of course, the Phase III study will be done depending on the mutation burden, it will be done either against a PD-1 pembro with chemo or versus a PD-1 alone. In terms of the maturing data, Miki, we don't have specific plans to share today as to when those data will be available, but we assure you that as those data mature, we would present them in a rapid fashion.

So thank you for the question, Sogi-san. Maybe I wasn't excited enough in my voice. We did -- I did talk about the launch preparation during the presentation, but let me share in more detail so that you get a sense of what we've been doing. So first, I will tackle ORZEYFUL when you look at the -- and I'm assuming you're asking specifically about the U.S., although both China and Japan are also fully prepared in China, we now have the approval, as you heard.

One thing I do want to say about China is that the submission for NRDL approval only -- the window is only once per year. And so the approval came after that window. So we won't be able to submit for NRDL until next year, meaning NRDL listing wouldn't be available until January of '28. So between now and then, we will focus on private market and then the full launch will be after we receive -- hopefully, we receive NRDL listing.

So in the U.S., as I mentioned during the presentation, we've had our MSLs in the field now for over a year. Focused on awareness and education around orexin and the mechanism of action. We've had our sales in the field mapping accounts, getting introduced to the sleep centers in particular. We've been running disease state education campaigns. We've been having payer meetings. Our specialty pharmacy network and patient support programs are ready to go.

So at this point, we are waiting for the FDA approval and then the subsequent DEA scheduling, and we'll be ready to go. For rusfertide, some very similar activities, again, in the field doing education and awareness. As I mentioned in previous calls, there is a sense of inertia in terms of the current level of treatment for polycythemia vera patients. They're viewed as a "good cancer patients". And so it's a lot of education we need to do to help shine a light on the burden that PV patients have.

We're also doing end-to-end patient experience programs that are, again, ready to go and of course, the payer engagements. So all of that is in play. In terms of the things that we -- metrics that we'll be looking at, it will be things like patient numbers, payer coverage and source of patients. So hopefully, that addresses your question.

Sure. Julie, I have one additional question. What is your -- the target of payer coverage after 12 months of launch? Commercial coverage.

Yes. So we are trying to secure commercial coverage as quickly as possible. So at this point, I'm not going to share a target with you, but we want to make sure we have broad coverage.

Thank you, Miki. I think we'll take one final question. So we'll end with Stephen Barker from Jefferies.

Steve Barker from Jefferies. So congratulations on the China approval of ORZEYFUL. Could you clarify whether the approved label includes both the 1-milligram and 2-milligram tablet strengths? That is do the physicians in China have the flexibility to prescribe either dose? Or is the label focused on the 2-milligram BID regimen that was tested in Radiant Light? And a follow-up question, is the same strength profile reflected in the U.S. and Japan applications, please?

Thank you, Steve. So Andy, would you like to answer those questions, please?

Sure. So Steve, the label hasn't been released yet in China. And of course, we're still in the process of discussing the label in the U.S. and Japan. So we can't comment specifically what's on the label, but we can say that the expectation in China and the U.S., at least, we've not gotten to this point of discussions with Japan is that physicians will have access to multiple doses for patients.

Okay. Great. And if I can just follow up with a question about TAK-360. There's 2 aspects of what you presented today that caught my attention. So you are testing an NT1, which suggests that it has the potential to expand the market opportunity beyond ORZEYFUL. I was wondering if you could explain that. And then also the fact that you're evaluating both once daily and twice daily dosing, if you could explain that development choice as well, please?

So just quickly in the interest of time, Steve. So again, we're fully confident in ORZEYFUL and the profile that we've seen for ORZEYFUL. We think it's going to be a best-in-class agent for type 1 narcolepsy. We also recognize that we're really at the front end of understanding what orexin biology can do across a range of diseases, understanding dose, dose exposure and clinical response.

And so with TAK-360, given that it's relatively early in development, our goal is to be as thoughtful as possible within a disease, testing as broader range of doses and dose regimens as well as across diseases to understand what the potential of that molecule is. And once we have all those data, then we'll make decisions as to what doses we bring forward and what indications.

Thank you, Steve, for your questions. That brings our Q&A session to a close. And I'd like to now hand over to Julie for some closing remarks.

So thank you, everyone, for joining us today and for your very thoughtful questions. I hope you are equally excited about our expected launches as we are. And I hope that many of you will join us later this year for our Capital Markets Day on December 11 here in Tokyo. I look forward to sharing our longer-term ambition with you and spending a bit more time on our strategic road map that will guide our growth through the end of the decade and beyond. So thank you again for your time, and have a wonderful rest of your day or evening.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[Audio Gap] [Operator Instructions]

[Interpreted] Before starting, I'd like to remind everyone that we will be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause actual results to differ materially are discussed in our most recent Form 20-F and in our other SEC filings. And please also refer to the important notice on Page 2. We may also refer to non-IFRS financial numbers. For the definition and reconciliations, please refer to the appendix in the presentation.

Now, let's start today's presentation. President and CEO, Christophe Weber; CEO-Elect, Julie Kim; Chief Financial Officer, Milano Furuta; R&D President, Andy Plump. They will be presenting followed by Q&A session. Let's start.

Thank you, Chris, and good morning, good afternoon and good evening, everyone. Thank you for joining us today for Takeda year-end earnings call. Today will be my last earnings call as President and CEO of Takeda. It has been a real privilege to serve over the past 12 years. During that time, Takeda has transformed into a company with a global scale, with a strong portfolio of life-transforming medicines and an innovative late-stage pipeline with significant potential. I'm incredibly proud of what we have accomplished together with our colleagues around the world, building Takeda into a focused global R&D-driven biopharmaceutical leader, consistently delivering on our financial commitment, advancing our pipeline and creating value for all our stakeholders, our shareholders, while staying true to our values.

Our CEO succession has been thoughtful and intentional focusing on preparing the company for its next chapter. In June, Julie Kim will formally assume the role of President and CEO following a well-planned transition that has allowed Julie to adjust our organization led by a new Takeda executive team to be involved in our Board evolution while staying focused on the business and supporting our launches and pipeline advancement. With Julie and the Takeda executive team leadership as well as the focus, commitment and dedication of our people around the world, the next era of Takeda is full of promise. As we reflect on fiscal year '25 and look ahead to the future, we are confident that our new products will propel us into a new growth era.

I would also like to thank our shareholders, sell-side analysts and the broader investment community for your trust, engagement and support over the last 12 years. That support has been essential as we undertook our transformation with some bold moves along the way.

And with that, I will now hand the call over to Julie, who will share today's business update and our guidance for the year ahead. Thank you.

Thank you, Christophe, and thank you all for joining us today. Let me start by taking a moment to recognize Christophe for his amazing leadership over the last 12 years and for building Takeda into the company it is today. I'd also like to personally thank him for his guidance over the past 7 years and particularly for his mentorship during our transition.

As Christophe mentioned, this organization has expanded and looks very different today in 2026 than it did when he joined the company in 2014. It was not easy, but it was made possible because of his leadership and the dedication of our teams around the world. As we reach the final stage of the CEO transition, I am honored to be entrusted with the opportunity to lead this incredible organization into its next chapter. Over the past several months, through conversations and visits with teams across our global footprint, I've been reminded again and again that Takeda is a resilient, purpose-driven organization focused on making a positive impact on patients, and we are well positioned for the future.

With that context, let me turn to our performance in fiscal year '25, a year that reflects both the progress we've made and the momentum we're carrying forward. As we close fiscal year '25, we start the next chapter from a position of strength, the culmination of a decade-long strategy that has reshaped Takeda into a focused global R&D-driven biopharmaceutical company. This was an important year for Takeda, and our solid financial performance and landmark Phase III data validate the journey we've been on and position us for major launches in 2026 and 2027. The three assets we expect to launch in the next 12 months not only demonstrate the depth and rigor of our pipeline, but also demonstrate -- but also reflect our ability to deliver against demanding development and regulatory milestones.

As you can see on the left-hand side of Page 5, in FY '25, core revenue was approximately JPY 4.5 trillion, partially impacted by LOE headwinds in our mature portfolio. With robust cost management, we delivered core operating profit of about JPY 1.17 trillion, a testament to our company-wide efforts to drive efficiencies and protect core operating profit. And we continue to generate strong cash flow to fund our growth and provide returns to our shareholders. Milano will walk you through the financials in more detail shortly.

We have also made excellent progress in the pipeline. On the right-hand side of Page 5, you can see that during 2025, we delivered outstanding Phase III results for three leading near-term late-stage assets, oveporexton, rusfertide and zasocitinib. We have advanced toward potential regulatory approval, positioning them as future blockbuster brands for Takeda. We also recently announced positive results from a pivotal trial of TAK-881 in patients with primary immunodeficiency disease. TAK-881 is a 20% facilitated subcutaneous immunoglobulin or Ig formulation that has demonstrated comparable efficacy and tolerability to HYQVIA with only half the Ig volume. This could significantly reduce patient burden as well as solidify Takeda's position within the subcutaneous Ig market.

Also in fiscal year '25, we initiated Phase III studies for elritercept in anemia-associated MDS and mezagitamab in IgA neuropathy, further strengthening the depth of our late-stage pipeline. And through disciplined partnerships, including our strategic oncology partnership with Innovent Biologics for TAK-928 & TAK-921, we continue to expand our long-term growth trajectory. Building on our pipeline progress and the financial rigor we achieved in recent years, we are entering a pivotal execution phase in fiscal year 2026.

Our near-term priorities are the successful launches of oveporexton, rusfertide and zasocitinib. In parallel, we will continue to advance the next wave of our pipeline through key data readouts for programs such as TAK-360, TAK-928, TAK-921 and zasocitinib in IBD. Importantly, our focus on transforming for growth under our evolved operating model will unlock new capabilities, efficiency and speed across the organization, enabling us to deliver on both our immediate launches and fuel our long-term sustainable growth.

While I mentioned that we achieved positive results for four Phase III programs, on Page 6, I'm going to focus on three assets we expect to launch in the next 12 months. With the transformational Phase III results for oveporexton, rusfertide and zasocitinib, all three programs have moved closer to potential regulatory approval and if approved, could become part of our new cohort of blockbuster brands. Over the coming quarters, our success will be defined not only by innovation, but by focused and disciplined commercial execution.

Let me start with oveporexton. We are on track to bring the first and only orexin agonist to people living with narcolepsy type 1 or NT1, potentially redefining the standard of care by addressing the underlying orexin deficiency. Phase III results demonstrated groundbreaking efficacy across a broad range of NT1 symptoms, supporting the opportunity to move beyond simple symptom control. Building upon our deep commercial expertise in rare diseases and neuroscience, we are preparing for launches cross-functionally and see a multibillion-dollar potential in the NT1 market. And with FDA priority review now granted, we are preparing for the U.S. launch of oveporexton in the second half of 2026. With priority reviews from health authorities in Japan and China, we are also preparing for launches outside the U.S. and have additional filings planned throughout the year.

Next, rusfertide. This is a potential first-in-class hepcidin mimetic that has the potential to shift the standard of care in polycythemia vera or PV, a rare blood cancer. Rusfertide has demonstrated rapid, stable and durable hematocrit control, either as monotherapy or when added to existing treatments, reducing symptom burden and the need for regular phlebotomies. With FDA priority review, we're now preparing to launch in the second half of 2026. Our commercial approach is very clear: building disease awareness, ensuring patients have broad access and leveraging our hematology commercial expertise and portfolio synergies to accelerate engagement with key stakeholders and drive rapid uptake.

And finally, zasocitinib. This is poised to be a leading oral treatment option for psoriasis patients with the potential to significantly expand the oral segment in a growing psoriasis market. We have seen rapid and durable skin clearance delivered through a convenient once-daily oral pill with no fasting restrictions. And when you look at the market, oral treatments are already the fastest-growing segment with the number of patients on advanced oral therapy expected to triple over the next decade.

As we prepare for commercialization in the first half of 2027, we are building on Takeda's experience in successfully launching in highly competitive immunology markets as we have with ENTYVIO plus the lessons learned with ENTYVIO PEN. Taken together, these three launches will reflect Takeda's ability to turn strong science into successful commercial brands.

Beyond our three near-term launches, we are even more confident in our pipeline because of the depth of growth potential in the next wave. Our broader late-stage pipeline of new molecular entities continues to deliver meaningful progress, and this now represents the most robust late-stage pipeline in Takeda's history. That depth gives us a strong foundation for sustained growth and value creation well into the next decade, and it reinforces our strategy of building a resilient core business to fuel a powerful and innovative R&D engine.

As Takeda enters an exciting new phase of growth, our CEO transition has continued to move forward with speed and momentum. By stepping into the role as an internal successor, I took advantage of that to move quickly, establishing the new Takeda executive team in Q4 that you see here on Page 8. Based on my leadership team, we've updated the organizational structure to transform the company for accelerated speed and growth. This has included reducing layers to bring teams closer to patients and customers, centralizing and streamlining corporate functions, driving greater efficiency through data, technology and AI. I am excited about the impact our new leadership will have in strengthening our high-performance culture, one that's essential to delivering meaningful outcomes for patients, both today and in the years ahead.

In addition to our Takeda executive team, our broader governance structure, including our Board of Directors, provides a strong and stable foundation for this new era. Our Board is composed of a majority of independent directors with a strong international mix and is chaired by Mr. Masami Iijima, an independent external director, ensuring strong governance and appropriate independence. As we position the company for its next chapter of growth, we are thoughtfully evolving the composition of our Board to align with Takeda's future needs. With the upcoming retirement of six long-serving external directors who collectively played a vital role in building the Takeda we know today, we are proposing three new Board members. I will be pleased to welcome Bruce Broussard, Koichiro Kimura and Paul Stoffels to Takeda's Board of Directors pending approval at the AGM in June.

Mr. Broussard brings decades of leadership experience with large global companies and international business management and deep expertise in the U.S. health care system. Kimura-san adds extensive experience in geopolitical risk and corporate governance across the Asia Pacific region and is a former Chairman of PricewaterhouseCoopers Japan. Dr. Stoffels brings an exceptional track record in pharmaceutical R&D innovation, having overseen the global launch of 25 medicines, first as Chief Science Officer at Johnson & Johnson and then as CEO of biotechnology company, Galapagos. This Board refresh ensures we have the right mix of skills, experience and forward-looking perspective to support Takeda as we work to capitalize on our historic pipeline and accelerate into our next phase of growth.

Takeda is at a unique and defining inflection point, an opportunity to reinvent ourselves to thrive in the future. This moment is shaped by the convergence of key catalysts, the upcoming launches of three potentially transformed patients, the accelerating impact of AI and the start of my tenure as CEO. The convergence of these catalysts offers a timely opportunity to lay out the path forward for our next chapter of growth. This journey will be defined by two horizons, one that will require us to transform our organization while investing in our launches, pipeline and technology and a second one, accelerating our growth to expand our longer-term impact.

On the left is Horizon One: Transforming for growth. A 2- to 3-year time frame. This horizon is about strengthening our competitiveness and positioning Takeda for the accelerated growth that will follow. Our business focus in this first -- in this horizon is first and foremost, to successfully launch our three new products over the next 12 months, oveporexton, rusfertide and zasocitinib and establish them as our next generation of growth drivers. In parallel, we will advance our five additional late-stage assets, including the two recently acquired oncology programs as well as the rest of our pipeline. We will also ensure the resilience of our core in-line brands like ENTYVIO, TAKHZYRO and GAMMAGARD LIQUID even as they navigate challenging market dynamics.

We are also committed to transforming our organization and processes, further unlocking new capabilities and efficiencies and freeing up resources to invest in growth. In addition to reaching new patient populations, our discipline in this first horizon will allow us to return to revenue growth as launches scale, protect our core operating profit margin, increase our return on equity, drive deleveraging and support our dividend policy.

On the right is Horizon Two: Growth acceleration. This is where the work we're doing today starts to fundamentally reshape Takeda's revenue profile over the mid- to long term. In the second horizon, we will unlock our potential by maximizing our new growth engine, shifting from our maturing portfolio to a new cohort of blockbuster brands. We will achieve this by scaling our first wave of launches while preparing for and executing the launch of our next wave of late-stage assets. This disciplined investment in new products and innovation, coupled with a commitment to greater operating efficiency is our strategy to not only navigate future LOE challenges, but to emerge from them as a stronger, higher-growth company, ensuring sustained expansion and a greater impact for patients.

Milano will talk more about these horizons and financial proof points of success that you can expect. Across both horizons, I want to be clear that our purpose and values remain constant. We are acting with urgency, but also with discipline and thoughtfulness as we work to deliver breakthrough medicines to patients and create a clear durable path to long-term growth for Takeda and our shareholders.

I will now turn the call over to Milano Furuta, our Chief Financial Officer, to discuss the financial results in greater detail.

Thank you, Julie, and hello, everyone. This is Milano Furuta speaking. In fiscal year 2025, we delivered solid financial results despite a year of significant VYVANSE generic erosion. Core revenue was just over JPY 4.5 trillion with a decline of 2.6% at constant exchange rates or CER. Core operating profit core OP was JPY 1.17 trillion, a year-on-year decline of 0.9% at CER with strong OpEx discipline limiting the profit impact from VYVANSE.

Reported operating profit was JPY 408.8 billion, an increase of 19.3%, reflecting lower amortization and restructuring costs. Core EPS was JPY 517, growing 3.1% at the CER and reported EPS was JPY 122. We delivered strong and stable cash flow. Operating cash flow was roughly in line with the prior year and adjusted free cash flow was JPY 684.5 billion. This is after the upfront payment of $1.2 billion to Innovent Biologics in December related to our strategic partnership in oncology.

Slide 13 shows our performance versus management guidance. Core revenue decline of 2.6% at CER was in line with our latest guidance, which we updated at Q3 due to stronger generic erosion than initially expected. Core operating profit declined 0.9% at the CER, slightly better than our latest guidance, reflecting additional OpEx savings as a result of strict cost management. Core EPS growth was 3.1% at CER. This was even better than our original guidance at the start of the year, mainly due to a favorable tax position as positive pipeline progress in 2025 resulted in a reassessment of the recoverability of deferred tax assets.

Slide 14 shows our Growth & Launch Products, which represent over 50% of total revenue and grew 4.5% at constant exchange rate. In GI, ENTYVIO grew 4.2% at CER, slightly behind our forecast of 6%. ENTYVIO continues to deliver growth as we enter our 13th year on the market, maintaining patient share leadership as the #1 brand in IBD in the U.S. However, we have seen continued pricing pressure as it becomes a mature brand as well as intensifying competition, especially in the later line settings. In this context, we expect growth of around 4% at CER again in FY 2026.

In Rare Diseases, TAKHZYRO was roughly flat versus prior year. Although we continue to see strong uptake in the international markets, this is being offset by the impact of new competing products in the U.S.

Our PDT business overall grew at 1.9% CER. This is a more moderate growth rate than seen in the past several years, reflecting ongoing health care system pressures and industry headwinds, but also Takeda's deliberate efforts to balance near-term growth and the margin improvements. IG grew 4.1% at CER, slightly behind our forecast as global supply in the industry has increased, resulting in downward price pressure. But importantly, we continue to see double-digit growth of our subcutaneous Ig products, which is a key profitability driver for PDT. While we -- while competitive pressure linked to supply dynamics has moderated near-term growth, we view this as temporary and believe the market will self-regulate, resulting in a more stabilized growth trajectory long term.

In FY 2026, we expect to grow mid-single digits in line with the market. ALBUMIN declined 2.1% at CER, impacted by lower demand in China due to government cost containment measures, which was partially offset by tenders in other markets. While we expect albumin growth to be broadly flat in FY '26, we do have a positive outlook for the mid- to long term as the situation in China settles while we continue to build sustainable markets outside of China.

Next, in Oncology, FRUZAQLA grew 14.6% at CER, in line with our forecast, driven by continued global expansion.

Finally, in Vaccines, QDENGA growth was 10.7% at CER. While global demand remains strong, this result was behind our forecast due to the delay of a contract signing in Brazil as well as lower incidence of dengue outbreaks in certain regions compared to the prior year.

From Slide 15, I will quickly walk through the moving pieces in our fiscal year 2025 results. First, revenue. Here, you can see how incremental revenue from Growth & Launch Products and the significant impact of VYVANSE loss of exclusivity contributed to core revenue decline of 2.6% at CER. In total, we lost approximately JPY 150 billion of VYVANSE revenue this year, and this headwind will be much smaller in FY '26.

Slide 16 shows operating profit. You can see that loss of exclusivity had an impact on our gross profit, but importantly, this was almost completely offset by OpEx savings. The efficiency program we initiated 2 years ago, alongside further efforts to manage our expenses resulted in over JPY 150 billion cost savings in fiscal year 2025. This enabled us to protect operating profit broadly flat versus prior year, while reinvesting a substantial portion of those savings into growth opportunities.

Next, reported operating profit on Slide 17. This grew 19.3%, primarily due to the end of amortization for VYVANSE in January 2026 and lower restructuring expenses, slightly offset by an increase in impairment of intangible assets.

Next, free cash flow. Free cash flow was JPY 684.5 billion, in line with our forecast. This reflects strong operating cash flow of over JPY 1 trillion and approximately JPY 430 billion of CapEx and investments, including the $1.2 billion upfront payment to Innovent Biologics related to our oncology partnership. Our free cash flow comfortably covered our dividend and interest payments and contributed to ending the year with a strong cash balance. This puts us in a good position as we prepare to pay down debt maturing in FY 2026.

Slide 19 shows the latest debt maturity ladder. We have approximately JPY 500 billion of debt maturing in fiscal year 2026 and our plan is to repay this mainly through cash on hand and the free cash flow we will generate through the year without refinancing by long-term debt. Our debt profile remains very manageable with 100% of our debt at fixed rate and a weighted average interest rate of approximately 2.4%.

Before we switch focus to FY '26 guidance, I'd like to summarize our ongoing focus on driving efficiencies and OpEx savings. In FY 2024, we initiated an enterprise-wide program to drive efficiencies across the organization, focused on organizational agility, procurement savings and enhancing capabilities with data, digital & technology.

Over the past 2 years, we have delivered significant results from this program as well as identify further opportunities to reduce costs, capturing approximately JPY 300 billion in gross annualized savings. This efficiency program enabled us to reduce OpEx over the past 2 years, limiting the impact of the VYVANSE LOE on our margins and freeing up resources to advance our pipeline, prepare for new product launches and further build our digital technology capabilities. With the cost reduction activities from this program now largely complete, we are pivoting to a new transformation program that will allow us to unlock further efficiencies aligned with a new organization established as a part of our CEO transition, which Julie just spoke about.

As a part of this program, we plan to centralize and streamline corporate functions, reduce management layers to bring teams closer to patients and customers, continue driving procurement savings, simplify processes and leverage data and digital technologies and expand the scope of our existing global capability centers. We anticipate approximately 4,500 roles to be impacted by this transformation in FY '26 with a restructuring cost of JPY 170 billion expected this year.

Through focused execution of this program, we expect to realize annualized gross savings of more than JPY 200 billion by FY 2028 with JPY 100 billion of savings in FY '26. These savings will be reinvested into growth opportunities, supporting the high priority launches of oveporexton, rusfertide and zasocitinib and progressing the other assets in our innovative late-stage pipeline.

Next slide, please. FY 2026 will be a year of growth investment for Takeda. Management's guidance for revenue is low single-digit percentage decline at CER. This reflects our maturing in-line portfolio as we shift towards establishing future growth drivers with the launches of rusfertide and oveporexton. We expect OP to decline between 5% to 8% at the CER, reflecting this period of investment. It is critically important that we invest appropriately behind our three upcoming launches to drive growth for the future. And at the same time, we are progressing multiple other late-stage pipeline programs, which require significant R&D investment. These investments will be partially offset by savings from the transformation program. Core EPS is expected to decline in the mid-teens, steeper than core OP due to the favorable tax position that was positive to EPS in FY 2025. We have a stable outlook for free cash flow at JPY 650 billion to JPY 750 billion and consistent with our progressive dividend policy, we plan to increase the annual dividend to JPY 204 per share.

The next few slides give more detail on the factors impacting our FY 2026 forecast. Slide 22 shows revenue. In this chart, we present our portfolio in three categories. Core in-line brands are products that are well established in the market, generate substantial revenue of over JPY 100 billion and are still actively promoted with sales and marketing investments. ENTYVIO, TAKHZYRO and ADCETRIS are examples in this category. New launches refers to products that are within 5 years of launch, such as QDENGA, FRUZAQLA and also includes upcoming new launches from the pipeline such as oveporexton and rusfertide.

Finally, LOE and the mature portfolio on this slide represents all other products, including off-patent products and older brands that no longer generate growth. We have made this change in categories from the previous focus on growth and launch products to emphasize the importance of new launches in our two growth horizons.

In FY 2026, we expect a smaller LOE impact compared to FY 2025, but at the same time, our core in-line brands will be more modest contributors to growth compared to the previous years. Meanwhile, contribution from new launches is still relatively small this year as we launch oveporexton and rusfertide later in this calendar year. We expect this category to be much more impactful on growth from next fiscal year. As a result, our management guidance for FY '26 revenue is low single-digit percentage decline at the CER, but with our FX assumptions of JPY 156 to the U.S. dollar and JPY 182 to the euro, we expect revenue on actual basis to increase by 3% to JPY 4.64 trillion.

Moving to the core OP forecast on Slide 23. This will be a year of growth investment in new product launches, R&D and other prioritized investments such as data and technology. This investment will be funded by the transformation program, and we expect to deliver OpEx savings of about JPY 100 billion in FY 2026. Overall, we anticipate core OP decline of 5% to 8% at the CER, but on actual FX basis, the decline is only 1.1% with a forecast of JPY 1.16 trillion.

Slide 24 shows our reported operating profit forecast. While we get the full year benefit of the end of VYVANSE amortization, this will be largely offset by restructuring costs associated with the transformation program. We expect reported operating profit to increase by 2.7% to JPY 420 billion.

Following Julie's presentation of our growth road map that outlines two strategic horizons, I'd like to comment on our financial priorities during these horizons. In Horizon One, as we transform for growth, we must manage our resources and ensure we make appropriate investments in building the foundations of future growth. As we establish new growth drivers in oveporexton, rusfertide and zasocitinib and as they build scale, we should return to revenue growth. For operating profit, our focus is on protecting the margin during this period of investment in new product launches and pipeline progression through efficiency savings and focused trade-off decisions.

While core operating profit growth may be limited in Horizon One due to investment, we should see an improvement in reported operating profit with restructuring costs winding down from FY '27 and ongoing scrutiny of our operating and financial expenses. It is very important to bring reported EPS above our dividend payments to the equivalent level of ROE above 5% within this Horizon One period. Meanwhile, our strong and stable adjusted free cash flow will allow us to drive further deleveraging towards our target of 2x adjusted net debt to adjusted EBITDA ratio.

Looking forward to Horizon Two and this period of growth acceleration. First, as the initial three launches gain momentum and supplemented by additional launches from the late-stage pipeline, we should deliver compelling revenue growth. This top line growth will be the main driver of margin expansion with the organization we are building through the transformation, giving us a stable cost base, enabling us to expand the core operating profit margin to the low to mid-30s percentage. This core profit growth will, in turn, drive reported profits higher, allowing to realize significant improvement in capital efficiency metrics such as ROE and ROIC.

And finally, with our leverage at 2x or below, we will have more flexibility in how we allocate excess capital. We will continue to pursue selected and targeted incremental investments to fuel future growth. I'm excited by this opportunity to build our growth engine in Horizon 1 and accelerate that growth in Horizon Two based on disciplined cost conscious allocation of capital.

In closing, on Slide 26, I would like to show our capital allocation framework, which has been consistent since last year, supported by a strong cash flow and a commitment to maintaining solid investment-grade credit ratings, we allocate capital to growth and shareholder return. Through the investments we make in Horizon One, and the growth acceleration we expect in Horizon Two, we are committed to delivering highly competitive total shareholder returns over the coming years. Thank you.

And I'll now pass to Andy for updates on the pipeline.

Thank you, Milano, and hello to everyone on today's call. Takeda R&D delivered an incredibly strong performance in 2025. We were 3-for-3 delivering positive Phase III data readouts for oveporexton, rusfertide and zasocitinib. Today, I'd like to highlight how Takeda's R&D is delivering on the promise of our late-stage pipeline by converting assets into successful launches while simultaneously building the foundation to support this next wave of growth. As Julie mentioned, oveporexton is a potential first-in-class orexin agonist designed to address the underlying orexin deficiency that causes narcolepsy type 1. Oveporexton has the potential to redefine the standard of care and how people with NT1 feel and function with treatment. It was granted priority review by the FDA, and we look forward to bringing this transformative medicine to patients later this year.

Next is rusfertide, a potential first-in-class hepcidin mimetic. Elevated hematocrit due to excessive red blood cell production is a hallmark of PV and failure to control it in PV patients has been shown to result in a 4x higher risk of death due to cardiovascular and thrombotic events such as heart attack and stroke. Rusfertide demonstrated rapid, stable and durable hematocrit control as well as improvement in fatigue, the most common constitutional symptom in PV. It was also granted priority review by the FDA, and we are poised for a launch in the second half of FY 2026.

Now I'd like to spend a few minutes on zasocitinib, including highlights from the data we presented at the American Academy of Dermatology in March. The key takeaway is simple. Zasocitinib delivers rapid and durable skin clearance in a convenient once-daily pill with no fasting restrictions. Psoriasis is a chronic immune-mediated disease characterized by itchy, painful, disfiguring and disabling skin lesions that affect patients' physical, emotional and psychological well-being. We believe zasocitinib is a potential best-in-class oral treatment for psoriasis that not only competes within the existing oral segment, but can also expand it. Zasocitinib addresses a clear unmet need for patients who today might move from a topical treatment directly to an injectable in order to reach higher levels of clearance.

The AAD data set reinforces this in two ways. First, how quickly patients begin to see improvement in skin clearance compared to the most prescribed oral therapies today. And second, how those early gains translate to sustained high levels of skin clearance and quality of life improvements. The data show early separation in skin clearance compared to apremilast. By week 4, a greater proportion of patients on zasocitinib had already reached PASI 90 compared to apremilast and placebo. Now this matters because speed isn't just a nice to have in psoriasis. Patients can see and feel the difference quickly, and that can influence persistence and satisfaction with therapy.

Now importantly, the early improvements in PASI are supported by the overall clinical profile. 7 out of 10 patients taking a convenient once-daily pill get great results with clear or almost clear skin as shown with PASI 90 scores, with a tolerability profile appropriate for long-term use. You can see the powerful results in the full body image on the right. This patient had over 95% of the plaques cleared from his back, arms and legs with 16 weeks of therapy. The broad clearance across the entire body is the kind of profile that can shift prescribing patterns and expand the oral psoriasis category. Again, you can see the rapid onset of effect with zasocitinib. We start to see meaningful clearance very early with a distinct trajectory of improvement over the first month.

For patients, that speed can be the difference between staying on an oral therapy and deciding that they need to escalate to an injectable. As we showed with the PASI 90 graph, the response is broad-based, and a majority of the patients achieved clear or almost clear skin. And of course, in psoriasis, it's not just about clearing plaques. It's also about addressing the emotional and psychological impact on patients' lives.

The DLQI is a patient-reported measure of how psoriasis affects day-to-day life, things like symptoms, social interactions, work and confidence. Consistent with what we see with skin clearance, patients on zasocitinib showed superior improvement versus apremilast and placebo as early as week 4. For prescribers, that quality of life signal showing up early and aligning with efficacy helps reinforce the overall value proposition. It supports our view that zasocitinib can be a very compelling oral option for patients who want both rapid results and meaningful quality of life improvements.

Beyond early response, we also want to know, are these results durable. Durability is critical in chronic diseases like psoriasis. In patients who remained on zasocitinib at week 40 and had a response, more than 90% maintained key efficacy thresholds on the physician global assessment as well as PASI 75 and PASI 90 through week 60. This is outstanding and the best durability seen among oral psoriasis drugs.

Now let's take a moment to double-click on the graph in the lower right-hand corner for PASI 90. When we look at the few patients who lost response and completed the trial, all patients maintain at least a PASI 75 and on average, had a PASI score of 84. That level of maintenance supports confidence that the early responses we see translate to durable control for patients. So taken together, rapid onset, improvements in quality of life and durable maintenance, we believe zasocitinib will be an excellent option for psoriasis patients as we advance towards launch.

Our pivotal studies show zasocitinib delivers rapid and durable clearance with no new safety signals. Up to half of the patients achieved completely clear skin as measured by the physician's general assessment. In real-world use, once-daily dosing, no fasting restrictions and a well-tolerated oral regimen that can fit into patients' lives will matter. The excellent long-term durability data suggests that compliance can be high as and part of our new cohort of blockbuster brands.

I'd like to close my remarks today by covering some important upcoming milestones that further reinforce our R&D momentum and the strength of our late-stage pipeline well beyond the three near-term launches. So, with three successful Phase III readouts of FY 2025, what's next? Takeda's strong development engine is operating at scale across all of our therapeutic areas. We expect a steady cadence of major catalysts across the portfolio through FY '26 and '27.

Let me highlight a few. In GI, we'll continue maximizing the value of zasocitinib with additional indication expansions. This fiscal year, we're anticipating filing an NDA for approval in psoriasis and reading out the results of the head-to-head study versus deucravacitinib in psoriasis to support the launch. In FY 2027, we expect to file zasocitinib for approval in our second indication, psoriatic arthritis. Over this 2-year period, we will also learn about the next indication expansion opportunities for zasocitinib from the 4 proof-of-concept studies, which include readouts in Crohn's disease and ulcerative colitis.

Mezagitamab. Mezagitamab is a fully human anti-CD38 monoclonal antibody with the potential to be best-in-class in the treatment of autoimmune conditions. Its unique, sustained and selective depletion of disease-causing target cells supports a pipeline and a product opportunity across multiple indications. In addition to two ongoing pivotal Phase III studies in IgA nephropathy and immune thrombocytopenia, we will be initiating a Phase II study in late antibody-mediated rejection of kidney transplants or AMR this year.

In IgA nephropathy, mezagitamab demonstrated compelling efficacy, including stabilization of eGFR and durable kidney protection for up to 18 months off of treatment. These results, combined with a favorable safety profile support the potential for meaningful treatment holidays and improved patient convenience. We believe mezagitamab is well positioned to become a leading treatment option in IgA nephropathy with regulatory filings anticipated as early as FY 2027.

In neuroscience, we will continue to expand our groundbreaking orexin franchise. The oveporexton filing in narcolepsy type 1 is proceeding well, and we expect an approval decision on or before our August PDUFA date. We anticipate filing in the EU based on the recently initiated 3003 randomized-withdrawal study.

Looking beyond oveporexton and NT1, we'll have the Phase II readout for TAK-360, our next orexin 2 receptor agonist in NT2 and IH. The data from these studies will inform our late-stage programs in patients with sleep wake disorders and normal orexin levels.

In oncology, the rusfertide review is on track, and we eagerly await the FDA decision by the end of August. For elritercept, the next indication expansion opportunities will begin shortly in anemia associated with first-line myelodysplastic syndrome and myelofibrosis. Over the next 2 years, we will have multiple proof-of-concept readouts for TAK-928, our PD-1/IL-2 alpha biased bispecific fusion protein and TAK-921, our Claudin 18.2 targeted antibody drug conjugate. The totality of these rich data sets will provide a clear picture on the initial expansion opportunities for our oncology pipeline, where we continue to advance programs with clear biological rationale and the potential to address high unmet needs while generating the data required to support the next stages of investment.

Our outlook summarizes the key assets and milestones to follow in FY '26 and '27. As we have highlighted throughout this call, we are on track to deliver FDA approvals for oveporexton in NT1 and rusfertide in PV in fiscal year 2026 and zasocitinib in psoriasis in fiscal 2027.

Fiscal 2026 is off to a good start with a positive registration-enabling Phase II/III readout for TAK-881 in primary immunodeficiencies. TAK-881 is a next-generation facilitated subcutaneous immunoglobulin, which is twice as concentrated as HYQVIA and has the potential to deliver the required immunoglobulin dose in half the infusion volume with significantly reduced infusion times and fewer injection sites. These results support TAK-881's potential to strengthen our leadership in subcutaneous immunoglobulins, a key growth driver for plasma-derived therapies. We're now preparing for regulatory submissions planned for this year.

If there's one message I'd leave you with about our outlook, it's this. Our patient-driven science-first approach to R&D has established a late-stage pipeline that can sustain Takeda's growth for the foreseeable future. Going forward, we anticipate an average of 2 to 3 NME filings and/or important U.S. indication expansions each year through 2030.

Momentum across our late-stage pipeline is strong and growing. It will provide a steady stream of NMEs and important indication expansions, establishing a new growth engine, shifting from our maturing portfolio and enabling a stronger, higher growth company that has a greater impact for patients globally.

And with that, I'll turn it back to Julie for closing remarks.

Thank you, Andy. This is an exciting time for Takeda. Over the last 12 years under Christophe's leadership, anchored in our Japanese heritage and with the steadfast commitment of our employees, we have grown, evolved and strengthened the organization to a truly global company with scale and a remarkably innovative pipeline.

I want to express my deep gratitude to Christophe for his remarkable leadership and lasting contributions to our company. He has been a role model for me and many others in the company, and I wish him well in the next phase of his journey. I also want to express my appreciation to the Board for the trust they have placed in me and in our executive team to lead Takeda and shape its future.

As we embark on our next era, we are fueled by our people within a new operating model. powered by innovative technology and AI, fortified by our financial strategy and guided by our purpose of better health for people and a brighter future for the world. With a strong foundation of enduring values and forward-looking capabilities, we are reinventing ourselves for sustainable innovation-driven growth. We approach the path forward with a steadfast commitment to execute against our two horizons. In the near term, we are focused on the launches of three transformative medicines in the next 12 months, putting us on a new growth trajectory.

Our ability to do so means that we will have built the necessary capabilities to create an engine for growth through our future launches. The innovative programs that follow in our late-stage pipeline will enable us to accelerate growth, delivering sustained value to patients, communities and our shareholders. We are united by the opportunity ahead of us and excited for Takeda's next era. Later this fiscal year at a Capital Markets Day, I look forward to outlining our longer-term ambition and the strategic road map that will guide our growth through the end of the decade and beyond.

Thank you, and I'll now hand back to Chris to open the Q&A session.

[Interpreted] Now we would like to entertain questions from you. Christophe, Julie, Furuta, Andy will answer. Additionally, U.S. Business Unit President, Rhonda Pacheco, Global Oncology Business Unit President, Teresa Betetti will be joining.

[Operator Instructions] First question from Morgan Stanley. Mr. Muraoka, please unmute and ask your question.

[Interpreted] First question is to Milano-san, Horizon One. In core, you mentioned 2 to 3 years of Horizon One and the operating profit will be limited and that means 2027 and beyond, there will be growth, but the growth is not big or does that mean it's flat? Can you give a bit more color, please?

Second question narcolepsy TAK-360 Phase II results may be available on your site possibly regarding dose setting, I heard that you are working on that. And can you give update on this? And details will be mentioned at World Sleep in September. Those are questions.

So the first question on core operating profit, what's the outlook within Horizon One? And any thoughts on fiscal 2027. So I'd like to ask Milano to comment on that. And then the second question, what is the latest status of the TAK-360 study? Do we expect the Phase II result anytime soon and perhaps a data presentation in September? I'd like to ask Andy to comment on that, please.

[Interpreted] Muraoka-san, thank you very much for your question. 2027 and beyond for that period, we want to be back to growth. That's the basic idea. core operating profit level, we should be back to growth. That's our projection. But how much growth rate, what would be the growth rate? It depends on the uptake of new products, new launches.

Muraoka-san, thank you very much for your question. This is Andy Plump. So, let me first reinforce we are 100% committed to our orexin franchise. And as we've discussed over the last hour, we are very excited to bring -- to have oveporexton approved this summer and very much looking forward to the launch in NT1 later this year. We have two molecules that follow oveporexton, TAK-360, as you mentioned, and TAK-495. These are next-generation orexin 2 receptor agonist. TAK-360 is being developed in NT2 and IH. We have ongoing Phase IIb studies. The design of these Phase IIb studies are quite creative. They're an adaptive design that allow us to rapidly work through the appropriate dose and administration schedule.

As I think we all are aware, for the orexin agonist threading the needle between efficacy and safety is really the key. And so we're being very thoughtful in how we work through our dosing regimen. We haven't disclosed plans for when we would disclose data from each of these studies. But I'll say that our two studies are progressing rapidly. There's a lot of excitement for both molecules, and we'll have data later this year to share.

[Interpreted] Next question is from Mr. Yamaguchi, Citigroup.

So this is Yamaguchi from Citi. I have two questions first. The first question is the kind of same question that Muraoka-san asked regarding Horizon One and Two. I wasn't quite sure what year you are referring to, Horizon One and Two. If you have a clear answer, please let me know what is the year for 2027 or '28 for Horizon One or Two? And the question regarding to this one is that if you're getting into the Horizon Two period, what is the kind of level which you are referring to in your head, what is the CAGR on the top line? That's the first question.

Second question is the plasma question. You asked about the oversupply and price competition. Not only for you, the all industry are suffering exactly same issue at the moment. And people are a bit worried about from the investment committee about the potential downside of this business, which you're putting some numbers for next fiscal year, but is there any downside risk? Or how long does it take to back to the normal business? And if you have something you can do for this?

[Interpreted] Thank you, Yamaguchi-san, for the questions. So the first on sort of more specific time lines for the Horizon One, Horizon Two and any more detail on the growth outlook in those horizons. And then the second question on the plasma business, current status and whether there's any downside risk. So, I'd like to ask Julie to take those questions, please.

Thank you, Chris, and thank you for the questions, Yamaguchi-san. In regard to the first one about Horizon One and Horizon Two, Horizon One is a 2- to 3-year time frame. So, we have not been specific about whether it is '27 or FY '28. It depends on the trajectory of our launches. So, there are some aspects that you see listed in Horizon One, we believe we can achieve within 2 years and some might take 3 years. So, that is the timing.

In terms of growth, we are not providing growth projections beyond FY '26 at this point. But later in the year, when we have our Capital Markets Day, we'll provide a bit more detail in terms of what you can expect in the two different horizons. But safe to say that Horizon Two, we are anticipating or targeting to have a much higher growth rate to propel our future growth beyond the LOE for brands like ENTYVIO.

Your second question is in regard to PDT. And so I'll break that down into albumin versus immunoglobulin. So, for albumin, as we shared, the current performance that you saw for albumin has to do primarily with the utilization control in China implemented by the Chinese government. We do expect that underlying demand will rebound over time. How quickly that will happen is difficult to say, but we do expect it to rebound.

When it comes to immunoglobulin, what you are seeing now is a return to a more normalized market. So, for the past number of years, we have had a supply-constrained market. But when you look over a longer-term time horizon, we often move between periods of lower supply and higher supply. And in the higher supply markets as we are in today, the focus becomes demand generation like you have in any other normal market. The impact of alternative medicines like the anti-FcRns, as we've shared in the past, is already included in our demand projections going forward. So, we are confident that there will be continued growth in the mid-single digits for Igs and return to growth for albumin in the coming years. Thank you.

Moving to the next caller. Next, I'd like to call on Mike Nedelcovych from TD Cowen.

I have two. My first question is on your Horizon Two vision. During this phase, can Takeda achieve the levels of growth and innovation to which it aspires while still participating as one of the major players in the plasma-derived therapies market? That's my first question.

And then my second question is on zasocitinib in psoriasis. You've emphasized that your competitors' product requires fasting, which could be a convenience hurdle. Are you also expecting compliance issues when it comes to that fasting requirement to possibly undercut the real-world efficacy of icotyde? Are there any, for example, precedents in your market research that suggests that's possible?

Thank you, Mike, for your questions. So the first on Horizon Two and where PDT may fit within that growth outlook, I'd like to ask Julie to comment on that. And then the second question around zasocitinib in psoriasis and particularly around the fasting requirements of a competitor. I'd like to ask Rhonda from our U.S. business unit to comment on that one, please.

Thanks for the questions, Michael. In regard to your first one, with our growth projections for Horizon Two, yes, we do expect PDT to contribute to that. So, as you saw both in my section as well as Andy's section, we have a number of late-stage assets that will contribute to the accelerated growth in Horizon Two, including TAK-881, which we shared a little bit about today. So, that combination of late-stage assets plus the continued progression we expect to have in our pipeline will fuel sustained growth in Horizon Two.

And I'll start here. Hi, everybody. This is Rhonda. Thank you for your question around zaso. I won't comment on exactly the data that you'll see with ICO, but we do believe that when you look at zaso's profile, the simple once-daily pill with no fasting restrictions is definitely one area we will differentiate. The other two exciting areas is going back to our efficacy and how fast zaso works as you saw rapid response at week 4 in that early response just keeps getting better with that out to week 16 and remains durable out to week 60. When we talk to both HCPs and patients, we hear that it's important to see that rapid 4-week result and also that durability and that convenience matters, eliminating a real-world barrier that can affect adherence and potentially a food effect. So, we're excited about zaso's profile. Again, it's rapid, it's durable and it's convenient with no fasting restrictions.

[Interpreted] Next question from Nomura Securities, Matsubara-san.

[Interpreted]

Matsubara from Nomura Securities. My first question is Page 20, transformation program for FY '26, about JPY 100 billion. And the sales and R&D numbers, do you have breakdowns? And for the next year, JPY 200 billion, so that SG&A would be flat or it could be lower? And second question about that in the past, you had mentioned there are no TB concerns, PACIFIC-2 requires TB testing. I wonder if your product requires TB testing, what is your opinion on this?

First on the breakdown of the savings as part of our previous efficiency program and forward-looking transformation program by SG&A and R&D. So, I'd like to ask Milano to comment on that. And then the second question was around thoughts around potential for tuberculosis testing for zasocitinib. I'd like to ask Rhonda to comment on that, please.

[Interpreted] Thank you very much, Matsubara-san. For FY '26 or beyond '26 cost items, details will not be mentioned this time, but this transformation program that is ongoing, and we expect much of that is coming from SG&A to reduce costs -- and there are -- you can compare some financial numbers. R&D versus '25, '26 is higher. Well, of course, FX is impacting, but there are elritercept, TAK-928 and others, there are various programs that we need to make investment. So, we would have a bit more increase. But up to FY '25, R&D had efficiency, thanks to efficiency program, the expenses have been tightly controlled. But for FY '26, we need to have good investment and transformation programs contribution will be mainly coming from SG&A.

To have successful launches, we need to make investment and FY '26 reflects that very much. You can compare SG&A for the last year and this year, you would know when you consider FX rate is more or less flat. So, excluding FX at CER basis, SG&A expenses considering launch preparation, it is actually a bit lower. So, transformation programs is coming mainly from SG&A. That's the plan.

For the next year, what is the outlook? and beyond ending March 2028? Yes. So FY '27 and beyond, well, transformation programs after JPY 100 billion towards JPY 200 billion, we will be wrapping up. On the other hand, there will be ups and downs in investment. Therefore, as of now, we can't give you more details beyond that.

Rhonda, would you like to take the TB question?

Yes. Thank you for the TB question. When you look at our clinical trials, we haven't seen any reactivation of TB in our studies. And from a pure commercial perspective, this is less of a hurdle since this is commonly managed among HCPs who treat patients in this disease state. But again, we haven't seen that in our studies. Thank you for the question.

Moving to the next question. I'd like to call on Stephen Barker from Jefferies.

Steve Barker from Jefferies. So, my first one is regarding estimates for oveporexton and rusfertide in the current year. I understand that you have PDUFAs for both drugs in August. And do you have any revenues baked into your current year estimates? That's my first question.

And my second question is regarding leverage. I understand from today's presentation that you plan to pay back JPY 500 billion of debt in this current year. And I think you finished last year with net debt to EV/EBITDA of 2.6x. Where does the net debt to EV/EBITDA land in the current year? And is -- are we getting close to that to your target of 2.0x target? And if you get there, what does that mean? What sort of extra flexibility will you have? And what might you do with that?

Thank you, Steve. So, the first question on whether oveporexton and rusfertide are included in our forecast numbers for 2026. I'd like to ask Julie to comment on that, please. And then the second question on the outlook for leverage at the end of this fiscal year, will we be close to that 2x target? And what does that mean for future capital allocation? I'd like to ask Milano to comment on that, please.

Thanks for the question, Stephen. So, when we look at our launches, yes, we do have revenues for both oveporexton and rusfertide included within our FY '26 forecast, but we don't provide individual forecasts for launch brands in their first year. It's due to a number of different factors. but let me just reiterate that we are very, very excited about these three launches, and we're laser-focused on the execution. And as I shared earlier, it's a top priority for us in Horizon One, and we look forward to updating you on our progress in future calls.

Steve, thank you for the question about the leverage. We expect a good pace of the managing this leverage ratio toward 2.0. We don't specify the exact timing. It might not be just a straight line, but we are pretty confident on our cash flow generation. And I expect -- we expect a pretty good direction toward the 2.0. But in the meantime, regarding your question on, okay, what does it mean more flexibility as we reach the 2.0. Well, it's basically the -- we continue to pursue good growth opportunities. We will be selectively choose attractive investment opportunities. And then that's always we do. But once or like we -- our leverage is become lighter, and then, of course, we have more flexibility. But, I would say we keep discipline on investments. We pursue the growth opportunities, but we maintain a discipline on how we invest.

Thank you, Steve, for the questions. Moving to the next question. I'd like to call on Tony Ren from Macquarie.

This is Tony Ren from Macquarie. I have two questions as well. The first question is about the clinical development program for your thinking about zasocitinib in the IBD. Recently, one of your competitor conducted a couple of Phase II trials testing a combination of interleukin-23 and TNF alpha agents together in in both Crohn's and colitis did not work out very well. I wanted to ask, Andy, whether that affects any of your thinking of zasocitinib's Phase III studies in these indications. And also I would like to ask whether you are thinking about any combinatorial approaches in immunology and inflammation. Yes.

Tony, if you could give us both of your questions upfront, and then we can.

Sure, yes. Okay. Yes. My second question is on ENTYVIO. So, as Milano said, the growth last year was slightly below expectation on a CER basis. I would like to just ask what's the causes for that? And looking forward, we see that one of your competitor -- one of your biosimilar competitors, Alvotech, recently launched -- recently filed in Europe. Anyone would like to ask about when do you think that will start to impact your European business and how you are preparing for that?

Okay. Great. Thank you, Tony, for the question. So the first on zasocitinib in IBD, in particular, thoughts on potential combinations. So, I'd like to call on Andy to answer that question. And then the second question on ENTYVIO performance and also thoughts on biosimilars. So, I'd like to ask Julie to begin that question and then perhaps Rhonda can add more detail as necessary.

Thanks, Chris. Thanks, Tony. for your question. So, let me just emphasize again how excited we are about the overall profile of zasocitinib. We're looking forward to filing in psoriasis later this year. We're looking forward to seeing the head-to-head data in the superiority study design against deucravacitinib, and we're looking forward to launching zazo in psoriasis early next year, followed rapidly by a launch in psoriatic arthritis.

To your question around IBD, first things first before we start to think about combination therapies, we'll have to see the results of the two Phase IIb studies in ulcerative colitis and Crohn's disease. We're obviously quite excited to see the data from these studies roll out. The the supporting rationale for efficacy in IBD is quite strong. But of course, we're going to need to see what those data look like. I think dialing up to your question around combinations, it's clear that the -- in order to pass the efficacy ceiling in IBD, combinations are going to be an important part of the treatment regimen. Still with that said, there's a dearth of oral options. And so, we see zasocitinib potentially is playing a very important role in that oral segment.

Thanks for the question, Tony, about ENTYVIO. So, let me address the biosimilar question first, and then we'll talk a little bit about the U.S. I will hand it over to Rhonda to give you some specifics on that. So as you noted, Alvotech has filed. They announced earlier in their earnings call that they had filed for marketing authorization in Europe. And as we have previously communicated, we have granted patents that cover various different aspects of ENTYVIO that expire in 2032. We are also aware that litigations have been filed to challenge certain patents in the U.K. and Netherlands, and we intend to vigorously defend these patents.

So, that's where we stand on the biosimilar situation in Europe, where there has been some movement in recent days. But again, we will defend our patent position there. Overall, as you heard from Milano earlier during his presentation, ENTYVIO is part of our core in-line brands, and we are going to be focusing on the resiliency of our products in that category. And so we will continue to focus on defending ENTYVIO as still the only gut-selective medicine for IBD and defend its share in particularly UC bio-naive patients. Overall, we did have lower growth for ENTYVIO, largely driven by dynamics in the U.S. So at this point, I'll hand it over to Rhonda to share with you some of the specifics around ENTYVIO in the U.S. Rhonda?

Thank you, Julie. ENTYVIO continues to deliver its sustained growth in its 13th year on the market. we're growing with the market in first-line where the vast majority of revenue is from that first-line treatment. When we look at the full year '25 versus '24, specifically in the U.S., we see that growth driven by demand and by mostly PEN demand. We also took a price increase, but that was completely offset by the gross to net pressure that you would expect to see in the 13th year on the market. resulting in, again, this is a U.S.-specific number, 2.2% revenue of '25 over '24. Moving forward, our confidence is in that first-line strategy with ENTYVIO, and we're focused on executing and clearly differentiating ENTYVIO in the market. Thank you.

Okay. I think we have time for one final caller. So next, I would like to call on Miki Sogi from Bernstein.

So, my first question is about zasocitinib. What is the likelihood you think of not zasocitinib as a label not having a requirement of TB because we have been hearing from multiple doctors that there's -- the TB test requirement is quite critical for dermatologists adoption of the drug. So, this is the first question.

And the second question is about your ambitions to reach core OP margin to the low to mid-30%. So, we understand that it's going to be a little bit far out. However, we'd like to understand what is the key thing that needs to happen for you to achieve that OPM ambition.

Okay. Thank you, Miki. So first, another question on TB with zasocitinib. So perhaps, Rhonda, if you could again just restate our thoughts on that. And then the second question on the key levers to get to the low to mid-30s margin. Milano can take that question, please.

Great. Thank you for the question. Going back to our clinical trials, we haven't seen any reactivation of TB in our studies. And also from a pure commercial perspective, we see this as less of a hurdle since this is commonly managed among HCPs who treat patients in this disease state. It's too early at this point to really make any thoughts on the label. But again, we haven't seen any reactivation of TB in the study.

Thank you, Miki, for the question. So, I would say that basically, the main driver to get the corporate operating profit margin low to mid-30s is really successful, a series of successful new launches. So, we're going to embark on this era with the first -- sorry, the oveporexton and rusfertide this year and then zasocitinib. But we have five more assets in the late stage and the pipeline. And then we are aiming to launch these assets after those three. And then that's a driver to get the low to mid-30s.

And then it's not necessarily kind of the profit accretive. It's become profit accretive from year 1 for each asset. normally it takes like year 2, year 3. And then we are making those launches, a series of launches in the coming next -- until the decades. So, as each launches we become successful and then that's going to accumulate, then we -- that's going to bring us to get the low to mid-30s. That's how we envision.

Thank you very much. Okay. With that, we've reached the end of time, so I'd like to bring this conference call to a close. Thank you very much for joining.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Thank you for joining us for the presentation of our zasocitinib Phase III data and commercial overview. My name is Elizabeth Borgeson. I'm part of the Takeda Investor Relations team. [Operator Instructions] Before starting, I'd like to remind everyone that we'll be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause our actual results to differ from are discussed in our most recent Form 20-F and our other SEC filings. Please also refer to the important notice on Page 2 of the presentation regarding forward-looking statements and non-IFRS financial measures, which will also be discussed during the call. Definitions of our non-IFRS measures and reconciliation with comparable IFRS measures are included in the appendix to the presentation. With that, I'll hand it over to Julie Kim, CEO Elect, to start the presentation.

Thanks, Elizabeth, and thanks to everyone joining us as we share Takeda's perspectives on the phenomenal results of the Phase III studies of zasocitinib in psoriasis. I'd like to start by introducing the 2 colleagues who will be presenting today. First, we have Chinwe Ukomadu, Head of Takeda's Gastrointestinal and Inflammation Therapeutic Area unit. Chinwe will review the impressive results of our Phase III clinical trials that were presented to the Dermatology Community a few hours ago in a late-breaking presentation at the American Academy of Dermatology Annual Meeting.

Next, I'd like to introduce our second speaker, who is making her first appearance with the Takeda investor community, Rhonda Pacheco. Rhonda joined Takeda last September to assume my former role as President of the U.S. Business Unit and U.S. Country Head. She joined us from Eli Lilly, where she oversaw complex portfolios in a range of leadership roles including the successful launch of the GLP-1 portfolio. I'm happy to have such an accomplished commercial leader join our team as we embark on the next exciting chapter of Takeda's growth. Rhonda will explain why we believe zasocitinib is poised to be a leading oral treatment option for individuals with psoriasis.

But before we jump into zasocitinib, I want to provide some context on where we are as a company. Last year, we had 3 outstanding pivotal data readouts for oveporexton, zasocitinib and rusfertide. This is a momentous period for Takeda as we position ourselves for a new chapter of growth. With strong safety and efficacy profiles, all 3 have the potential to transform patient treatment and to be blockbuster brands. The excitement across Takeda is palpable as we are preparing to execute 3 major launches in the next 15 months. Before deep dive on zasocitinib, let me briefly share a few reminders about our other 2 groundbreaking medicines. Starting with oveporexton, an orexin receptor-2 agonist designed to address the underlying orexin deficiency that causes NT1 by restoring orexin signaling.

Phase III results presented last year demonstrated oveporexton's potential to achieve outcomes that matter most to individuals with NT1 and with the potential to redefine the standard of care. Oveporexton is the first orexin receptor-2 agonist to have a new drug application accepted by the FDA, and it was granted priority review with an August PDUFA. We are well positioned for a successful launch of oveporexton in the second half of this year.

Next is rusfertide, a hepcidin mimetic that demonstrated rapid, consistent and sustained hematocrit control in individuals with polycythemia vera, or PV. Maintaining hematocrit control is the primary treatment goal of PV, yet 4 out of 5 treated patients have uncontrolled hematocrit, putting them at higher risk for cardiovascular and thrombotic events such as heart attack and stroke. The impressive Phase III data presented last year underscores the potential for rusfertide to shift the standard of care for PV patients. Earlier this month, we announced that the FDA accepted our new drug application for rusfertide and granted priority review. We have an August PDUFA date and also expect to launch rusfertide in the second half of this year.

Now let's turn our attention to today's focus, zasocitinib. Let me share with you why we are all so excited about zasocitinib, our next-generation, highly selective TYK2 inhibitor and more importantly, what it means for patients. What we hear from individuals with psoriasis is that they want clear skin with a treatment that fits effortlessly into their daily life. Zasocitinib has demonstrated rapid, durable skin clearance in a convenient once-daily pill that does not have any fasting restrictions. Based on this profile, zasocitinib is poised to be a leading oral treatment for psoriasis patients with potential to significantly expand the oral market. With Takeda's proven track record in immunology, we are prepared to execute a successful zasocitinib launch in the first half of 2027. Now I'd like to turn the presentation over to Chinwe to walk us through the data in more detail. Chinwe, over to you.

Thank you, Julie, and welcome, everyone. My name is Chinwe Ukomadu. I'm the therapeutic area head for GI and Inflammation at Takeda. And it is my great pleasure to share with you the exciting data that we presented today at the annual meeting of the American Academy of Dermatology. We're going to talk about zasocitinib and its role in the treatment of moderate-to-severe plaque psoriasis. Zasocitinib is an investigational, next-generation oral inhibitor of TYK2. Zasocitinib is extremely selective for TYK2, displaying more than 1 million fold greater binding selectivity for TYK2 when compared to similar kinases, JAK1, 2 and 3. In addition, it inhibits the kinase exquisitely, maintaining inhibition over 24 hours at drug levels that prevent signaling through an immune disease-driving pathway as shown to the right of this slide.

We previously shared with you our Phase IIb data using zasocitinib in patients with moderate-to-severe plaque psoriasis. And we had told you that the drug was well tolerated and efficacious. As a result, we designed 2 Phase III studies, next slide, referred to as LATITUDE-PsO-3001 and 3002. For the remainder of this presentation, I will refer to these studies simply as 3001 and 3002. These were randomized, multicenter, double-blind, placebo and active comparator-controlled Phase III studies. The subjects in these studies were adults with moderate-to-severe plaque psoriasis. There were 2 co-primary endpoints. The first, the static Physician Global Assessment, sPGA and, in this case, sPGA of scores 0/1. The second, PASI, PASI 75 in this case. There were a number of secondary endpoints, which were either evaluated at week 16 against placebo or at week 16 and 24 against the active comparator apremilast.

Now a word on the studies themselves. Study 3001 randomized around 690 patients in a 3:1:1 ratio to receive zasocitinib 30 milligrams by mouth once daily, apremilast 30 milligrams by mouth twice daily and placebo. Study 3002 randomized over 1,100 patients to receive zasocitinib 30 milligrams by mouth once daily, apremilast 30 milligrams by mouth twice daily and placebo in a 2:1:1 ratio. In addition, in Study 3002, patients who attained a PASI of 75 at week 40, underwent a randomized withdrawal. Patients could continue on zasocitinib or went on placebo in a 2:1 ratio until week 60. For this presentation, I will concentrate on events from the start of the study until week 24 for both studies. In addition, for Study 3002, I will also highlight events during the randomized withdrawal portion of the study.

Next slide, please. The baseline demographics and the disease characteristics for the study were generally balanced across the treatment parts. A number of things were highlighted. One, at the very bottom of this chart shows you the data on the percentage of bio-experienced patients. Roughly 1/3 of the patients in both studies were bio-experienced. The second point to make is that there was a trend towards: one, higher BMI; two, longer duration of disease; and three, more severe psoriasis for patients in the 3002 study.

Next slide, please. Now the results. The study met both its primary endpoints and all 44 ranked secondary endpoints. There are 4 data highlights that I would like to convey to you from the slide that is being shown right now and I will do this sequentially. First, the primary endpoint, sPGA 0/1. This was evaluated against placebo at week 16, and as you can see, in Study 3001, 71% of the patients and in Study 3002, 69% of the patients achieved this endpoint. This compares to 11% and 13% of placebo respectively in these studies. To the right, are graphs for the second co-primary endpoint, PASI 75, also evaluated against placebo at week 16. And we showed that 76% of the patients on zasocitinib in 3001 and 71% on zasocitinib in 3002 achieved this endpoint compared to only around 12% in both studies.

The third point to make is the comparison between zasocitinib and apremilast. Across both studies and both endpoints, zasocitinib was vastly superior to apremilast, displaying across the board between weeks 16 and 24, a twofold difference in efficacy in both studies and both endpoints. And lastly, I want to point to you -- point out to you the events that become obvious by week 4. As shown here already, you can appreciate that there is numerical advantage of achieving these endpoints in patients who received zasocitinib versus those who were on placebo. And this is shown better in the next slide, please. Here, we are showing you the data from week 0 to week 4 in these studies, and you can see that across the board, we have nominal statistical significance of zasocitinib over placebo as early as 4 weeks of treatment.

Next slide, please. We then asked how, what would happen when we use a higher and harder-to-obtain endpoint in these studies. We are showing you the data for PASI 90 for both Study 3001 and Study 3002. By 24 weeks, up to 69% of our patients have attained PASI 90 in this study versus around 20% with apremilast. The picture on the right shows 1 such patient, who entered the study with 25% body surface area covered with psoriatic plaques. And you can see that by week 16, this has largely resolved and what you have left are areas of pigmentation that are visible on the picture.

Next slide. But patients really want clear skin. And so we ask how do patients fare with regards to clear skin in our studies? To the left, we are measuring clear skin using sPGA 0 and you can see that for both Study 3001 and 3002, we have high rates of clear skin. By week 24 up to 49% of our patients have attained clear skin as measured this week. You can also appreciate that at this point, there is already around a sixfold difference in the efficacy regarding clear skin between zasocitinib and apremilast. To the right of this slide is clear skin as measured by PASI 100. We showed that up to 42% of our patients attained this endpoint and that's close to a tenfold difference in efficacy between zasocitinib and apremilast. In all the comps that I've shown you, there's another factor that's really obvious, which is that between week 16 and week 24, the efficacy continued to improve.

Lastly, on this slide, you also see 1 thing that's really obvious, that by 8 weeks, that's clearly superiority of zasocitinib with regards to clear skin when compared to both the active comparator and to placebo. Next slide. This shows a picture of such patients who attained clear skin. This patient had 62% of their body surface covered with psoriatic plaques and by week 16, there was no evidence of the disease plaques on the patient's body. How about how patients feel? Next slide. We used a commonly used tool in dermatology to evaluate what the impact of the disease is on a patient's quality of life. This is called the Dermatology Life Quality Index.

In this case, the question is, does zasocitinib treatment improve patients' quality of life? DLQIs of 0/1 imply that psoriasis is not affecting the patient's quality of life. And you see 2 things that I would mention in the graph that are in front of you. The first is that by week 24, up to 60% of the patients are reporting DLQIs of 0/1, which says that psoriasis is not affecting their quality of life. The second is that this is manifest as early as week 4 during the treatment.

Next slide, please. The drug was very well tolerated, and we saw no new safety signals from what we had previously reported in our Phase IIb study. Most of the treatment-emergent adverse events were mild or moderate in nature. We saw no trends towards laboratory abnormalities, such as blood counts, liver enzymes or lipids. The most frequent treatment-emergent adverse events were related to infections of the respiratory tract -- or respiratory tract infections or nasopharyngitis. We did see some acne, but a very low rate of only around 6%, and most patients continued through the study with no treatment or with just mild topical treatment to a large extent. There was a death in the study, and this is not unusual in large studies of psoriasis, where most patients are often elderly and have comorbidities and this was the case with this patient who died during the study, unfortunately, and investigator reported that the death was not related to the drug that he had received.

Next slide. Now I'd like to call your attention back to what I told you earlier about the randomized withdrawal part of the study. Just to refresh your memory, I told you that patients who had attained PASI 75 by week 40, were either randomized to continue receiving zasocitinib or transitioned to placebo in a 2:1 ratio. Next slide. We have some exciting and remarkable data here. We show that patients maintained response they had up until week 60. SPGA 0/1, PASI 75 and PASI 90 of greater than 90% from the response they had before. The second thing is that for those who transitioned to placebo, the pace of loss of response was very slow. And even 20 weeks afterwards across the board, across these 3 end points, more than 50% of all the patients continued to maintain the response that they had before. This suggests that in a real-world setting, where people might miss a dose or 2 because of travel or life events, the fear of losing the response is -- might be diminished.

Next slide, please. So where are we with the ambition we had for zasocitinib at the time we in-licensed this asset? Well, I've just shared with you the data for the Phase III readout of psoriasis, we will have more psoriasis data this coming fiscal year as we read out our head-to-head against deucravacitinib. We've begun our study in pediatrics and we are well on our way to finish in the Phase III study for psoriatic arthritis. We have 4 additional indications. Crohn's disease and ulcerative colitis, which we anticipate study readouts for the Phase II studies in FY 2026, and vitiligo and hidradenitits suppurativa, which we anticipate -- which have started, and we will give you more information in the near future.

Next slide, please. So what have I told you? I have told you that this is a drug that delivers rapid and durable skin clearance as a convenience one-daily pill. The data that I've shared with you point to this across the board as follows: 49% -- up to 49% of patients achieved clear skin as measured by sPGA 0 by week 24. The response is rapid. We've shown you data that you can see this as early as week 4, either with PASI 75 or sPGA 0/1. The response is durable. Patients can maintain this response up to 60 weeks out, and we've shown you that the treatment comes with an improved quality of life for those patients who have to disrupt the disease. The drug was well tolerated, with a safety profile that's consistent with what we've shown you previously and we saw no labs such as cholesterol or lipid increases that are worrisome in the study so far.

Next slide. Now it is my great opportunity to turn the presentation over to my colleague, Rhonda Pacheco, who will then tell us how we can get this amazing drug to our patients who are waiting for it.

Thank you so much. Let's first start with the market and the unmet needs within the market. Of the 1 million moderate-to-severe patients treated today, only 50% are on advanced therapy. Why is that? Patients stay on ineffective conventional therapies longer than they should because they want to avoid biologics, maybe because of injections, safety concerns and the impact on their daily lives. Also, there hasn't been a highly efficacious and safe oral treatment available, but as we know, that's changing, resulting in a growth opportunity with orals being the fastest-growing segment, projected to triple from 100,000 patients to 300,000 patients in the next decade, driven by patient preference for next-generation orals like zaso who help patients achieve clear skin in a convenient once-daily pill.

Next slide. When we speak to patients and healthcare professionals, patients are seeking an oral medicine that, does it work? Does it work fast and last? And is it safe? We also hear a lot about convenience. Can it fit into my daily life, orals over injectables, once daily versus twice daily and no worries about food or timing of when to take it. We are excited about zaso and the data because it aligns to what patients are asking for. Does it work? And does it work fast and last? Yes. Zaso delivered clear to almost clear skin in 70% patients by week 16. It delivered rapid clearance at week 4, and we heard from patients, they feel better, giving them the confidence that it's working, demonstrated by strong durability with 90% of patients maintaining response at week 60. Is it safe on top of efficacy? The data showed no new safety signals. And lastly, does it fit into patients' daily lives, getting to that convenience piece? Yes, again, zaso comes in a once-daily pill that can be taken any time because it has no fasting restrictions.

With this data and excitement also comes preparation for a successful launch, which we won't take for granted with no stone unturned because we want to get zaso into the hands of patients that need it. The team is extremely focused on launch readiness, and I want to highlight a few things. Entering a highly competitive market, we know that. We're familiar to that. it's familiar to us as we have done it before with ENTYVIO in IBD, very successfully, and we will build on that experience. Because of ENTYVIO, we have experience with payer dynamics and know how critical access is for zaso's success. That's why we are engaged with payers and will continue to do so. External engagement with thought leaders, patient advocacy groups and other stakeholders is also important for us. We will listen carefully to their needs and continue to educate the community about the TYK2 mechanism and its safety profile.

Lastly, we understand strong investment is needed to maximize commercialization of zaso, starts with strong data, which you saw today, and we have the right team and investment to realize zaso's market potential. Bottom line, we believe zaso is positioned to transform and expand the oral advanced therapy market. In PsO market, in the psoriasis space, next-gen orals like zaso will drive significant growth of the oral class. We believe zaso is poised to lead among the oral options as the number of patients treated will triple in the next decade. Beyond psoriasis, we are also seeking a PsA indication, with data expected next year. PsA indication will further support our psoriasis business, providing an oral solution across psoriatic disease. This combined opportunity could bring revenues of $3 billion to $6 billion globally. We also have several other Phase II programs across derm and GI. In dermatology, we started 2 studies this past year in vitiligo and HS.

In GI, we expect Phase II data in both UC and Crohn's disease in this coming year. In closing, we're excited that zaso is poised to be leading the oral treatment for patients with psoriasis, significantly expanding the oral market. Data today reinforces that zaso brings rapid and durable skin clearance and importantly, with no new safety signals. Zaso meets patients' needs by providing a convenient once-daily pill without fasting restrictions. As we know, zaso is a next-generation, highly selective oral TYK2 inhibitor developed to advance psoriasis therapy. Along with zaso, U.S. filing is on track for this year with global filings to follow. And with that, the end of the presentation.

[Operator Instructions] The first question, the first question comes from Shinichiro Muraoka of Morgan Stanley. Muraoka-san, please go ahead.

[Interpreted] I am Muraoka from Morgan Stanley. Congratulations on excellent results. I'd like to ask you a question in Japanese. And I would like to ask a question comparing different clinical trials compared to other companies' clinical trials. What is your assessment of these trials? Zaso showed excellent results. But if we look at these 2 trials, there are some variances, but other companies' trials, they show in some cases, some differences. In some other cases, not. So could you comment on the differences that you saw in these 2 trials? And second question is that as an oral treatment option, you are going to be #2 in the market. Then in order for you to become a leading oral option, which particular points you'd like to appeal going forward?

Thank you for the questions, Muraoka-san. For the first one in regard to the differences between zaso and other options that are available. I will ask Chinwe to address that. But let me start by saying, in general, it is challenging to make cross-trial comparisons, but Chinwe can provide some of his perspectives on how we view zaso in particular. For your second question, in terms of being second to launch, behind ico. I think that's what you were referring to. I will ask Rhonda to give her view on how we think we will differentiate ourselves vis-a-vis the rest of the oral treatment options in psoriasis. So Chinwe, first to you.

Yes. Thank you for the question. We obviously do not comment usually on other people's trial since we were not involved in running them. But I can tell you how excited we are about the data we have and why we view the data from both of our trials as being completely consistent with what we expected. So in this study, as we've mentioned, the drug is rapid. It starts to have an effect quite early in the treatment period as early as 4 weeks. The response is durable. We show that 70% of our patients achieved clear or manually clear skin by week 16. We show that responses in both studies continue to deepen even after you go past week 16. We are reaching clear skin rates of 49% when we evaluate clear skin by sPGA 0 and 42% when we use PASI 100.

Now between the 2 trials, obviously, subtle differences in numbers. This is not unexpected in trials that are of this size and actually is typical of other trials run elsewhere. And the reasons could be anything from regional variations, could be as a result of the instruments that are used and their complexities and the way they're used in different parts of the world. What is remarkable, if you look across the totality of the data, is the pattern and the trend of the data looks pretty similar across the board. So we are ecstatic. We think this data is as good as we would want it. And even on the safety side, we saw nothing new that would be of concern to us. So overall, it's a solid data package as we would have expected despite the small differences in the 2 trials.

Building on the excitement of the data, zaso's profile excites us because of how fast it works. We see a rapid response at week 4, exactly the kind of quick relief patients are looking for because they want to feel better early knowing the drug is working. And that early response just keeps getting better. We see that rapid response continue to mature to week 16 and remains durable out to week 60. All of this comes in a simple once-daily pill with no fasting restrictions. Convenience in this space matters. Unlike competition, zaso does not require an empty stomach or timing around meals, eliminating a real-world barrier that can affect adherence and potentially a food effect that could impact the competitor's efficacy. Competition expands this category and grows the overall oral market, it doesn't shrink it.

Keep in mind that today, over 100,000 patients per year are treated with an oral advanced therapy with less favorable profile than zaso, presenting a great opportunity to convert many of these patients. We expect the number of patients treated with an oral therapy to triple over the next decade and as you saw from our profile, it shows that we have real confidence because we provide rapid, durable and convenience with no fasting restrictions.

Our next question comes from Hidemaru Yamaguchi of Citi. Yamaguchi-san, please go ahead.

Can you hear me?

Yes, we can.

I have 2 questions. This is Yamaguchi from Citi. The first question is that I didn't have a chance to listen to AAD call itself [indiscernible]. Can you give us some, I don't know, feedback or atmosphere or whatever it is of a live sort of impression you had at the meeting of AAD if some of the members did attend the meeting. That's the first one. The second one, you gave me a $3 billion to $6 billion sort of assumption at the moment, together with the market to grow from 1 million to 1.3 million patients. And calculating back to the numbers, it looks like you're talking about 10% to 20% market share of this new market? Is it the right assumption or not really? Can you give us some rough guidance, what kind of market share you're assuming from this assumption? That's the second question.

So thank you for the questions, Yamaguchi-san and [Foreign Language], I'm also in Tokyo. So unfortunately, I'm not with the team at AAD, but both Chinwe and Rhonda were there. So I will ask them to provide commentary on the atmosphere and the reception that we had for zasocitinib. And then in regard to your second question about our commercial assumptions, I will ask Rhonda to address that question. So Chinwe, do you want to start?

Yes. We're excited, and I think everybody is excited at what the data for this drug showed. The presentations at AAD are very short. They are 12 minutes long. But what's remarkable is the number of people who've come up to us since the meeting to tell us how exciting the data is and how they feel this could be something very impactful for patients. We've had the opportunity to meet with our investigators and our advisory boards who are equally excited about the data that we have presented here. So overall, I think the entire Takeda team feels that this was a really great day for us to share with the world the potential of this asset that we brought into the company around 3 years ago.

Great. I'll go through the market question. Getting back to maybe high level, how we're viewing the market is supposed to expand significantly, driven by, as I talked about, this unmet need that we're hearing from patients and healthcare providers. And today, we see many patients on suboptimal treatments and a high unmet need for efficacious oral options. 10% of the moderate-to-severe market are on orals which is roughly that 100,000 patients with 50% of those patients stopping therapy within 6 months due to limited efficacy. Clearly, there's the unmet need that exists. In addition, as we talked about, over the next decade, oral penetration is expected to roughly double with 3x the amount of patients treated on an oral. Growth comes primarily from patients stuck on that conventional therapy cycle that they're in today and some will come from patients on injectable biologics that are waiting for better oral therapy option like zaso. Again, with our data, we can finally give patients a rapid, durable and convenient oral option, and we believe that zaso can lead the way in this class.

And let me just end by saying, as I said, I am not at the meeting with the team, but I have seen pictures and heard from many of our team members who are there today. Takeda has a significant presence at AAD. And you would not know that we were a new company to this space, if you were there yourself, Yamaguchi-san. So we'll send you some photos. .

Our next question comes from Hiroyuki Matsubara of Nomura Securities.

Can you hear me?

Yes, we can.

I'm Matsubara from Nomura. I have the 3 questions. My first question is efficacy. In the subgroup of the patients who had prior exposure to biotic medicines, so what are the PASI and sPGA result if you have? And the second question about the treatment process shown on Slide 18. Okay. Could you explain the reason behind the loss of efficacy in 5% of patient at PASI 75 and 90% at PASI 90. Also, how long can patients typically remain on zasocitinib? And second -- sorry, third question concerns the side effects. So serious side effect occur in the 3% of patients. So what are the main causes and is the event manageable? And also compared to the other competitor drugs, the side effect is slightly higher than others. So what do you think about the side effect? That's all for me.

Okay. Thank you for the questions, Matsubara-san. So all 3 are really addressed to Chinwe in terms of the data from our clinical trial. So I'm going to hand it over to Chinwe to answer them one by one. So actually I'm forgetting the first one. So Chinwe, hopefully, you wrote it down.

Biologics, okay.

Yes. biologics patient results.

And then the second one is...

Treatment persistence.

Why it's not 100%.

Yes.

Okay. And then the third is side effects, you said. Yes. But I didn't quite get.

Yes. What is the main reason for the patient or the 3% of serious side effect and also compared to the other competitor drugs, the side effect is -- onset rate is slightly higher than others. So what do you think about this side effect?

Okay. I will start with the efficacy, the bio experience. So we obviously have a lot of data that we are working through. But what I can tell you is that having looked through various subgroups, including the bio-experienced group, we do not see any differences in efficacy between that group and the other groups. We would love to present that data at a future date.

Two, this was about why not 100%? My view here is that because data is being reanalyzed over time that it would be probably difficult to maintain 100% efficacy in a rerandomization at week 40. What is remarkable actually is that most of those patients stay at the same rate, which says that this was not a random occurrence at week 40. And then lastly, regarding adverse events, almost all the events were mild to moderate, and the higher rates were mostly due to upper respiratory tract infections and acne. In fact, I think with comparison to the active comparator apremilast, if you remove the upper respiratory tract infections, there was pretty close to a balance in the number of adverse events.

So the SAE rates are low. Most of them are related to infections and the rate of discontinuations across all 3 arms whether it is zasocitinib, whether it is apremilast or placebo were similar. So we didn't -- we don't think there is anything unusual in the adverse event rates that we obtained in this study.

Our next question comes from Seiji Wakao of JPMorgan.

This is Wakao from JPMorgan. Congratulations for your great data. So I have 2 questions. First about onset. Onset -- regarding onset, the results appear favorable based on the Study 3002 both trials. We understand that zaso's onset being broadly the same as icotrokinra. How do you assess zaso's onset relatable to icotrokinra? Do you see it as superior or essentially the same?

Second question about marketing. So could you share your strategy for zaso? What do you see are the key success factors for the launch of zaso? In particular, how do you plan to offset the roughly 1-year delay in launch versus icotrokinra? I understand the clear difference from icotrokinra is no food drug interaction. So I'd like to know so no food drug interaction, how is it meaningful advantage? And could you share your thoughts on the target patient population? Who do you see as the primary target for zaso, biologics naive or patient? That's it from me.

So thank you for the questions, Wakao-san. In terms of the first one, I will ask Chinwe to address that. And in terms of the second one with the positioning, et cetera, and the time difference for zaso versus ico, I will ask Rhonda to address that one. So the rapidity of onset, Chinwe, over to you.

Yes. Thank you very much. It's a good question. Can't really comment on any comparison with ico, as I noted earlier. But I can tell you why the rapidity here is extremely exciting to us. What patients have told us is they want a drug that will work quickly and work durably. So with response to quickly, we have seen effects as early as week 4. And we have additional data in what I've just shown you to actually also back that up. So I showed you the data on the effect of zasocitinib on quality of life. And you also start to see that impact as early as week 4. What that says to us is that with regards to our drug, we are seeing effects in patients who are taking this medicine that suggest that skin is improving and improving rapidly. Since we have not done a head-to-head against anybody else outside of apremilast so far, we cannot comment on other people's claim on rapidity, but our own data does show that we have something that works quickly and helps patients start to feel better in a short period of time.

Great. I'm excited to share 3 things when I -- when we think about our go-to-market strategy, one is the positioning. Zaso is poised to be a leading oral option and the Phase III data that you saw gives us that confidence. The product positioning is critical, and that's why our focus is disciplined execution and clearly demonstrating zaso's strong clinical profile. As you saw today, we demonstrated rapid and durable skin clearance in a convenient once-daily pill, which is really good news for zaso's positioning. Second is access, working with payers to see our value proposition with the goal of speed and quality when it comes to access. We expect steady early adoption, followed by acceleration as confidence and access bills and growth should accelerate that acceleration growth over the next 8 to 12 months after launch.

Lastly is awareness to activation. This is a competitive market, and we know that. And like any major launch, it's going to take time to build that base of patients but again, we're focused on executing, which is critical. That starts with our medical teams today around the TYK2 class and safety, and we'll continue as we continue to build our field force and get really smart with key channels like direct-to-consumer to, again, not only awareness but to activate patients to come into offices and ask for zaso.

Your second question I'll get to is around the market. Growth for zaso will come primarily from patients stuck on conventional therapy, that cycling that happens with psoriasis patients. And some will also come from patients on injectables right now, injectable biologics that are waiting for a better oral therapy option like zaso. Again, we're extremely excited because zaso provides that rapid, durable and convenient option for patients.

Okay. Could you comment on the no food drug interaction. How is it important for penetration for zaso?

Yes. Unlike the competition, zaso does not require an empty stomach or timing around meals. It's simple. Talking even to HC -- healthcare professionals today, it's just 1 less thing to worry about when prescribing a psoriasis medication, we will have to see how it plays out in the real world. But if we have a convenient option that once daily and has none of those fasting restrictions..

And I would just say, Wakao-san, when you think about your own life and having to measure time when taking medicine, I know for me, that would be a barrier for me taking a medicine just given how busy schedules are and how they can change. So we do think that this -- in a market where individuals value convenience that this will be a differentiator.

Our next question comes from Tony Ren at Macquarie. Tony-san, please go ahead.

Congratulations on the very strong results. I wanted to ask you a couple of questions. First of all, about your -- the responses we see in the control arm on Slide #10. We can see that on both the PASI 75 and the sPGA measures, patients on placebo and apremilast performed extremely well, much better than the -- what we see in the FDA label for apremilast as well as the [indiscernible], I think presented at the same conference, can you think of any reason why the control arms did so well? That's my first question. The second one is that in the apremilast FDA label, we -- the FDA required a dose titration, right, of going over 5 days. Did you do the dose titration for apremilast? Do you think it might have affected the DLQI? And lastly, have you seen any rhabdomyolysis in your study?

Okay. Thank you for those questions, Tony. I'm going to hand those all over to Chinwe. The first was, I believe, the placebo effect, particularly in our PASI 75 score, I think, is what you were focused on. And second was, in general, the performance of apremilast and did we do the dose titration that's required on the label for apremilast. So Chinwe, if you could address those, please?

Yes. So for the very first question on the placebo rate. So these placebo rates to my knowledge are similar to what has been seen in other studies usually around 9% to 12%, which is right where we fall. Two, we have no cases of rhabdomyolysis that we've seen in this study, and yes, we did do the dose titration in the study.

Our next question comes from Hiroshi Wada at SMBC Nikko Securities. Wada-san, please go ahead.

[Interpreted] This is Wada, SMBC Nikko Securities. Can you hear me?

Yes, we can hear you.

[Interpreted] Yes, I have some questions. First of all, about the overall market. which segment of the market is going to grow? And what is the positioning? So this is the overall market question. And with injectables, for example, I think there are long-acting injectables. In other words, the administration can be only once every 3 months, for example. But as the overall products continue to grow, which part of the market -- segment of the market, will it take? Are you going to take the patients who are not on these long-acting injectables or you will also go for patients who are not on injectables? So how do you think the oral market will grow?

Okay. Thank you for those questions, Wada-san. And I will ask Rhonda to share with you again our thinking behind where the patients will come from for zasocitinib and why we think the oral segment will continue to grow. So Rhonda, over to you.

Sure. So if you look at today, the advanced therapy market is about 50% and 10% of that is orals. And we see the oral market growing in the next decade from 10% to 22%, which again is that 100,000 patients to 300,000 patients. So not only it's growing the advanced therapy market, but also the oral piece of that advanced therapy market. And your question about where we find our growth from is, again, primarily from patients that are stuck on that 50% today of conventional therapies but continue to cycle and try things. And so that is where zaso is positioned. And again, we'll compete to move patients from conventional to orals also is there are patients that are on injectable biologics today and will be in the future, but they don't have something to come to when it comes to an oral, and they prefer an oral therapy, but nothing has been efficacious today.

And we believe that there is some growth with patients that are on biologics that will come over to zaso but most of it is our focus, is really getting patients to get off those conventional therapies into a very effective medicine like zaso quickly.

[Interpreted] Next question, ico in oral. My question is a head-to-head study against icotrokinra. Do you have a plan to do that?

So Wada-san, I can tell you, we currently do not have plans to do a head-to-head study with ico.

With that, we will conclude our call today. Thank you, Julie. Thank you, Rhonda. Thank you, Chinwe and thank you to all other participants. Have a great rest of the weekend.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Good afternoon, everyone. Welcome once again to TD Cowen's 46th Annual Healthcare Conference, and welcome to the Takeda session. We're very pleased to welcome Dr. Andy Plump, who is the President of R&D at Takeda, joined by his IR team. And let me say at the top, if anybody has a question in the room, please feel free to raise your hand and we can call on you.

But I, of course, will take the liberty of the first question, and it is a big picture question. setting the stage for Takeda. 2025 was really a phenomenal year for the company. You had 3 NMEs, rusfertide, oveporexton and zasocitinib, all of which had positive Phase III readouts. We're now headed into launches of those drugs. We're also looking at a maturing in-line portfolio, and you have a new CEO coming in June. So maybe you can help us understand as investors how to think about the next chapter for Takeda.

Thanks, Mike, and hello, everybody. So I was in a town hall a couple -- a week ago with my team, and I said I turned 60 last year. I don't know if I'm allowed to give that information confidential. And so I spent a lot of years in this business. And I have to say that the last year was by far the most exciting and successful of any that I've been in for the reasons that you just suggested.

So amazing time for us with Julie Kim coming in as CEO. Julie, I've been working with for 6 years now. I know her very well. She's just an amazing individual. We're all really excited about her transition. We'll miss Christophe immensely. I started with Christophe. He came 12 years ago, I came 11 years ago. So this is a huge transition for me and for the whole organization.

But I can't imagine someone better poised to take over. And of course, an internal candidate tells you how enthusiastic the whole organization is up to the Board to carry forward the momentum that we've generated. So just from a big picture, the past couple of years, a lot of focus on VYVANSE, loss of expiry, '24, '25 took the big hits, '26, that will start to level off for us.

While at the same time, we have a group of products that we call our launch and growth products. I think in Q4, we'll come up with a new name for these because we're going to have another set of products that are going to be our launch products. And what we're seeing with our launch and growth products is that they're starting to mature. And so their growth starts to become much more moderate over the coming years.

And this is then where the excitement happens with these new launches. So 3 great readouts. I know we're going to talk a lot about them. Last year, we're really looking forward to approvals and launches starting this year, and we're already starting to lay the foundation for what those launches will look like. And of course, each of these 3 products from oveporexton to rusfertide to zaso have a very different market and a very different structure around the launch.

Great. Well, maybe we could start off talking about oveporexton in that market. PDUFA date in August. How should we think about the launch? And what's the sort of ideal candidate right from the get-go for a drug like oveporexton?

By candidate, you mean?

Patient candidate.

I see. So if you have type 1 narcolepsy, you are a candidate for this drug. This is really one of the most exciting drugs that I've ever been a part of. The data that we've seen in our Phase III study has just been phenomenal.

Essentially, not quite, but essentially all patients benefit from the drug and the vast majority normalize on whatever efficacy endpoint we studied, whether it's daytime sleepiness, whether it's cataplexy, whether it's cognition, whether it's nighttime symptoms, this drug oveporexton has benefits across this whole spectrum.

And for the majority of patients, it's normalization. So what we see in this market is that if you're a type 1 narcolepsy patient, you're likely to need one medicine to fulfill all of your needs, and that's oveporexton.

We're quite excited about the -- getting it approved and launched. Of course, we have the PDUFA date set in August, but we're doing everything we can that's in our power to see how that can move up and get accelerated.

What should we anticipate in terms of the label? There's a pretty broad set of endpoints that was measured in the pivotal trials. What among those might make it on to the product labeling...

Yes. So first, I'll say that the amount of data that we have in this program is extraordinary. It's the endpoints that we can measure are just so quantitative. So we've talked about the fact that we have in our -- each of our Phase III studies, 14 different endpoints. We've hit with very high significance and clinical meaningfulness on every single endpoint that we've studied.

And in addition, we have a number of exploratory endpoints that are quite interesting. I'll say that for those of you who follow this field closely, we've disclosed a fraction of the data that we will be disclosing, so less than 50%.

So expect over the course of this year to see a large amount of additional data coming out. We are keen to fully own this space since that means better understanding the journey of a type 1 narcolepsy patient. And so we're working very closely trying to unravel biomarkers, whether they're digital biomarkers or other biomarkers that can help us further understand patient needs.

So you've probably seen we've announced a partnership with Beacon using their Dreem device to help measure sleep. That's both to help us with oveporexton uptake, but also our broader interest in the sleep wake cycle.

And then I'll mention, you asked about the label, and you're asking what we can expect from the label. We have that same question because, of course, that's still part of the process in the review. But I think our base case is that it's going to be a very attractive label for physicians and for patients and include as many endpoints as possible.

Great. Before we move off the orexin franchise, maybe we could talk about TAK-360. Phase II NT2 NIH data are coming later this year. Are you more optimistic about prospects for this molecule given competitor data readouts?

And maybe you could put the entire competitive landscape into some context for us.

Sure. So I wouldn't say I'm more optimistic based on what we've seen from the competitors. I think we've been optimistic all along. We've had a lot of experience, not just in type 1 narcolepsy, but in type 2 NIH.

You'll remember, Mike, and many will remember that we've done with TAK-925, the first orexin agonist to go into the clinic, our IV molecule with TAK-994. We've explored quite broadly a number of indications beyond NT1. So a, we know -- we have a good sense, at least with short durations of therapy, what one can see with this mechanism across a range of different indications.

And then secondly, we have deep expertise internally and especially that translational expertise that help us understand what kind of molecule one needs in the various diseases as much as one can and how to develop those molecules across these diseases.

So we feel quite excited about our franchise of orexin agonist, starting with oveporexton launch in NT1 likely that will be the single indication for oveporexton. TAK-360, which, as you mentioned, is in Phase II studies for IH and NT2.

We hope to have data rolling out this year. And then the third molecule, TAK-495 that's just gone into the clinic. And all 3 of these molecules has very different pharmacological profiles that allow us to tackle these different disease states. I will -- if you don't mind, I just wanted to go back quickly.

We are running one additional Phase III study for oveporexton. It's a study that will enable registration in Europe, but it will also provide additional information that will help us to further position it in the U.S. So it's a randomized withdrawal study. So we'll know how patients who are taking a medicine prior to washout do when they transition to oveporexton.

And I did mention that the vast majority of patients normalize with the doses of oveporexton that we studied in our existing Phase III program. There are some patients that may need a little bit more agonism.

And so we have the ability in this now ongoing Phase III study to test slightly higher doses for a small percentage of patients.

And you said that trial is required for registration in the EU.

That trial will be -- that's right. That's right. It's going to be a relatively small trial. The studies that we've run have been about 150 patients each. This one will be slightly smaller. And given our experience with sites and with investigators and the excitement around this mechanism, as soon as we open this trial up for enrollment, it's going to -- it will enroll like that. So that will happen fast.

And the rationale for higher doses is potentially better efficacy, I imagine.

Right. As I said, I think that we've hit it for the vast majority of patients with the 2 doses that we've tested. So right now, just so everybody knows, we have 2 dosing regimens. We have 1 milligram and 1 milligram given about 3 hours apart in the morning. We have 2 milligrams and 2 milligrams given about 3 hours apart in the morning. And again, the vast majority of patients are fine, many at 1 and 1 the majority of 2 and 2, there might be a small percentage of patients that just need a little bit more.

So we have a chance in that trial to go a little higher. You can also imagine -- I mean, everybody's physiology around sleep wake is slightly different. So having these 2 doses, having them administered 3 hours apart, at least by way of our trial, you can imagine flexibility, one dose slightly higher, 1 dose at a slightly later time point. So we think that with that flexibility in the administration schedule, we're going to be able to achieve the needs of essentially every patient with NT1.

I actually failed to ask you about other indications that you might be exploring for oveporexton outside of NT1? Is there anything of note that we should keep on our?

So right now, our focus for OV will be NT1. For 360, you mentioned we're looking at other rare sleep wake cycle disorders like IH and NT2. And then as 495 matures and as additional molecules come in the clinic, you think of it as a pyramid with NT1 at the top, then these other rare sleep wake cycle disorders like NT2 and IH. And then it starts to open up to conditions that have larger patient sizes have different market considerations. And our goal is to focus on any indication that would lend itself to orexin 2 receptor agonism.

Is there an example or two you can give?

Sure. So there are a number of different conditions. So let's -- I'll give you buckets, let's say. So there are other rare disorders that we don't talk about like, for example, Prader-Willi syndrome. There are disorders that this mechanism has unique biology and pharmacology and that are driven by respiratory issues.

So the prototype there would be obstructive sleep apnea, but there are many others that fall into this realm. Of course, the challenge there is that you need to maintain orexin 3 probably beyond the daytime and into the night, perhaps more so than we do in narcolepsy.

And so how you thread that needle requires a lot of precision around the pharmacokinetic profile, but also the pharmacology of the molecule. And then you could imagine many neurodegenerative conditions that are characterized by either cognitive impairment because we're seeing just unprecedented results on cognition by sleepiness.

My mom actually has Parkinson's disease and her #1 complaint, and this is common for many Parkinson's patients is that is the fatigue and sleepiness that she has through the day. So you can imagine a broad range of potential indications.

I don't think you're going to find a single molecule that's going to work across all of these indications, which is why our strategy has been start with NT1, that's OV, move into other rare sleep wake cycle disorders and then start to expand and start to understand the pharmacology that you're going to need.

Any questions from the room?

Are you highly confident that the FDA will not want to see the data from the Phase III trial?

So it's a great question. So the trial hasn't started. And so we were cognizant of that question as we went into this. And I think that based on the package that we submitted because we had discussions originally with the FDA that one trial would be sufficient, and we knocked it out of the park with the first trial and the second trial then finished 5 days later. So we, of course, included both.

So we feel very confident based on the quality of the package we've sent in, the discussions that we had with FDA before we started Phase III and then the interactions that we've had since. And I think that, that would be highly, highly, highly unlikely.

Yes. Eric?

There are so many different sources of idiopathic hypersomnia sometimes they can vary to medication prescriptions...

Secondary to medication and other things. Where does that figure in your list of potential indications? And could you size that opportunity relative to others?

So maybe we should repeat the question because I don't think it was...

Yes.

So the question was about idiopathic hypersomnia and thinking about the heterogeneity of hypersomnia conditions that don't have a clear etiology and then the size of that disorder. So it's -- I mean, I dissect that question in a few different ways, Eric.

One is that there is a condition that in and of itself is called idiopathic hypersomnia that has a code, a reimbursement code that's associated with it. And then there are other forms of hypersomnia that exist as part of other indications. So you have a disease and then you have symptoms, let's say.

So the size of that disease is small relative to NT2 and NT1, but on the larger side relative to rare diseases. So maybe we're talking as opposed to 100,000 plus like you'd see in NT1 or maybe 200,000 plus that you'd see in NT2 to something in the order of 50,000 patients with IH.

I'm ballparking that number for you. But as you can imagine, it's a difficult disease to diagnose and it's extremely heterogeneous. We were quite surprised and actually excited by the fact that the first molecule we brought in the clinic, which you'll remember, TAK-925, we did a proof-of-concept study in IH. And the levels of efficacy that we saw were essentially equivalent to what we're seeing in type 1 narcolepsy.

I think that just speaks to the fact that regardless of why you're hypersomnolent, this mechanism will wake you up. In terms of the size of the population of patients who have hypersomnolence as part of some other disorder, there, you're probably talking millions, right? You're talking millions.

If you look at diseases like Parkinson's or MS or even Alzheimer's, there have been estimates that suggest that 20% to 30% of these populations could have hypersomnia. Now how you target those populations, how you access that market, not simple because they're so heterogeneous and there you're not talking about the disease itself, you're talking about a symptom associated with the disease.

You talked about the data you've always been optimistic throughout. Can you just maybe discuss profile and...

Sure. So the tolerability and safety profile of oveporexton has been outstanding. I would say that the issues that we've seen are known mechanism-based issues. And the 2 most significant are obviously insomnia and then the second are urinary symptoms.

Interestingly, we now have data that extends out well past a year, looking at patients, and you see efficacy that continues from day 1 to 1 year plus. You do see sensitization to many of the tolerability issues, particularly the insomnia.

So patients that have insomnia, the vast majority, 80% to 90% will have it within the first week or 10 days of dosing. And then for the majority of those patients, it will go away. You do have some patients that have persistent insomnia.

It's hard to distinguish what those patients are experiencing than what any of us might experience. But you do still carry forward that AE, that tolerability issue of insomnia. And it's pretty much the same with the urinary issues.

You see sensitization early, perhaps not 80%, 90%, but the majority of those patients then sensitize and no longer have those issues. We don't see visual disturbances.

We haven't seen them in any of our trials. The first time we really saw them were in our Phase III studies after there was just an immense amount of public awareness of visual disturbance that have come from our competitor molecules.

And so of course, when physicians are asking continually and patients are primed, you're going to see this. And interestingly, we saw a fairly similar incidence of visual disturbance in our Phase III trials between the placebo arm and the active arm, which is suggestive that it's a suggestive phenomenon, not a real phenomenon.

Whether there's something there because you do see -- you've seen reports of higher incidents with some other molecules, particularly at higher doses, I can't tell you, but we've had a hard time explaining mechanistically why orexin 2 receptor agonism would lead to visual disturbances.

Maybe we can move on zasocitinib. So you presented or at least disclosed the first Phase III psoriasis data. The full data, I think, will be presented very soon. Can you recap what you've disclosed so far and how it fits into the competitive landscape in your mind?

Yes, absolutely. So really excited. We had a range of possibilities for what our Phase III trial would look like. And I would say that this was at the kind of higher end. The results were at the higher end in terms of what that range would look like.

They're very consistent with what we saw in Phase IIb, almost identical, maybe even a little bit better, which I think is quite unusual when you look at the work that we do. You typically see some weaning of activity between Phase IIb and Phase III for a number of different reasons.

So zasocitinib, I think as everyone knows, is a highly potent, highly selective TYK2 inhibitor. It's clearly once-a-day dosing with a beautiful 24-hour coverage with the once-a-day doses that we are administering for psoriatic arthritis, which is our 30-milligram dose, we have 90-plus percent inhibition of TYK2 over a 24-hour period. There's no food effect, which I think is going to be quite important for this class.

So a tolerability and safety profile that was very consistent with what we had seen in Phase IIb. And then an efficacy, as I mentioned, it was really just phenomenal. Over half of the patients had complete or nearly complete clearance of their psoriatic plaque on skin, slightly over 30% had 100% clearance.

It is really just phenomenal. And as I said, it was as good as we could have expected. We looked at almost 45 different endpoints across our 2 trials, prespecified endpoints. And again, similar to oveporexton, all of them were significant and many with the number of zeros before the one beyond anything that I've ever seen before.

So it's a really highly effective drug and really quite excited about it.

Great. So slightly over 30% PASI 100. When we get the full data at, I believe, 80, what data points would you urge us to focus on.

Yes. So we are presenting at AAD. So we just found out that we have a late breaker. So we're excited to have an oral presentation. I would look at -- so it's a lot. I would focus on the efficacy and the safety data, of course. And on the efficacy data, I would look at a couple of different elements.

One would be the rapidity of activity, right? So many of the biologics can take months before you start to see effect and then it can take even more months before you see plateauing of that effect.

We see benefits as early as 4 weeks, which is quite unusual. It's hard to do cross-study comparisons, but I think our conclusion, and you've come to your own conclusion is that we're as good or better than any other oral option that exists on the market today or that is coming on to the market in the near future.

Yes. So we'll have an investor call as part of that. So it will be the presentation from the principal investigator and then we'll -- I'll be out there as well. We'll do an investor call and share our perspective and be able to answer questions as well.

Any question in the room?

[indiscernible]

So the question was how we feel our Zaso psoriatic arthritis data compares with the [ Ilumis ] data. It's -- I mean, it's hard for me to say because all we've seen from [ Ilumis ] is a press release and you see you get snippets. I think we'll have to wait and see what happens in their -- with their presentation.

Just the one obvious differentiator that's just obvious is we're once a day and they're twice a day. And I think in a market like psoriasis, having a once-a-day option is going to be a considerable differentiation.

So zasocitinib is also in a Phase II IBD trial, ulcerative colitis and Crohn's, which is due to read out later this year. What are the data that support the idea that other TYK2 inhibitors have failed in IBD because they didn't achieve sufficient inhibition of the trial?

So interestingly, the reason we brought zasocitinib in was because of our strength and history and strategic interest in IBD. And then we became interested in the immunology conditions, psoriasis and psoriatic arthritis, of course. So there are 3 lines of evidence that suggests that TYK2 inhibition should work in IBD.

The first is pharmacological evidence. You see biologics like IL-23 inhibitors that work upstream of TYK2 are highly effective. Now they have other pathways that don't necessarily require TYK2, but it's a strong, I think, a very strong rationale. The second is we look at animal models of colitis with all the caveats of an animal model, they're highly effective.

And the third that has been, by far, the most compelling is the genetics. So we know that there are loss of function TYK2 variants that exist in a fairly high percentage of the population, 1 in 25 individuals of European descent. And so you have many patients who are heterozygous and many patients who are homozygous. And for both heterozygotes and homozygotes, they are protected against Crohn's disease and homozygotes, but not heterozygotes are protected from ulcerative colitis.

So yes, the existing TYK2s that have been tested in IBD have not been effective. We strongly believe what you said, Mike, was that none of those have been tested at the level of inhibition that you need to see efficacy.

So interestingly, the animal models, the exposures that you need to see efficacy in colitis are much greater than the exposures that you need to see efficacy in models of psoriatic arthritis, right?

The genetics, the fact that you see protection and you see in the homozygous and the heterozygous suggests again that you need more exposure. And the doses that we're testing in our Phase IIb studies give us exposures that are probably 3-plus fold more than what's been studied previously. So we'll see what happens over the course of this year as those data read out, but we continue to feel quite optimistic about the potential in IBD.

Questions from the room? So when we get those Phase II data, the first thing that people like me will do is put them in a chart next to other data. Should I include in that chart JAK inhibitors? Or are they so different as to be an inappropriate comparator, mainly because of safety issues?

Well, I mean, if I were in your shoes, I would include everything because why not? Because if you have a drug that's available, you want to make sure that you're including it in your thinking. It's not how we think about it. Firstly, I don't know whether JAK inhibitors are quite effective in IBD, and they come with the baggage that we know about, but the efficacy is quite substantial.

In fact, as great as anything that's really that's out there. Other oral agents that are used in IBD are significantly less effective. There are very few oral agents that have the efficacy, tolerability, dosing ease and safety that we're expecting with zaso.

So I think we'll have to see what happens. The other thing that we're looking into, we think that zaso in and of itself has potential as a monotherapy in IBD, and that's how we've designed our Phase IIb studies. I think if you look at where IBD is headed in the future, given the efficacy ceiling that we're seeing with every agent that's out there, if you really want to think beyond and as we're starting to think towards kind of having generic penetration, you have to start thinking about combination therapies.

And we think that zaso, given its mechanism, given its tolerability and safety profile, lends itself nicely to combination therapies as well.

And a good combination partner presumably would be...

[ IBD1. ] That would be one, of course, yes, that mechanistically makes a lot of sense given the synergies between the pathways.

Okay. Maybe we could talk about -- a question from here.

When it comes to IBD, I'm just curious how you think when we see limited efficacy, sometimes what we see is right? I'm curious if you think that adding that second immunological agent is what will get us to mucosal healing? Or do we need to do something else to get the regenerative capacity of epithelium going?

Yes. So I'll have to get someone who knows much more about this space to come and speak with you. Yes. Well, I think that the answer to your question is I think that we know that there's still -- even patients who respond to then relapse, they still have an inflammatory disease. Right? They're still primarily an inflammatory disease.

So I feel with high confidence that having coming at the immune system through different angles will give you added benefit and maybe the potential for more durability, right? Whether you need additional mechanisms to overcome other aspects of this disease like the stenosis that we see or other aspects of the disease, I think absolutely for sure. But that doesn't preclude the potential for combined immunological mechanisms.

Yes. And my question was about mucosal healing and prospects there.

Yes.

I don't want to neglect rusfertide in our last couple of minutes at launch in polycythemia vera is on the horizon. I think phlebotomy is the procedure that you hope to essentially replace. Can you just tell us a little bit about the competitive landscape there for rusfertide?

Sure. Well, essentially, there is none. But there isn't a very effective, very inexpensive standard of care, which is phlebotomy with its limitations. But maybe I'm glad we save time for rusfertide. I'll rank order what I see as the R&D head as the challenge. The 3 programs that we have and the rank order of the challenges of our launch, the easiest, although nothing is easy, is ovaprextin, right, then rusfertide then zaso. And that plays to really the market -- how the markets exist today.

So rusfertide, the profile is just incredible in terms of what we're doing for patients. We're seeing -- we now have 4 years data, and we're seeing that with rusfertide, patients with polycythemia vera 90-plus percent are still within normal hematic ranges at 4-plus years, which is just extraordinary.

The challenge is that -- and this is, by the way, rusfertide on top of standard of care. So standard of care would be hydroxyurea or other cytoreductive agents. About 50% of patients end up taking hydroxyurea. I don't know that patients will need to continue on both. It's just that physicians like as they start a patient on one, they add another, they tend to maintain that paradigm.

The problem is that phlebotomy is about 75% of patients don't achieve hematic levels of below 45%, which is target with phlebotomy alone. A lot of that is compliance, right? But why are they noncompliant? Because it's an awful procedure to go through at the frequency that you have to.

Secondly, there are issues with phlebotomy, so iron deficiency ironically, and there are a number of different sequelae of iron deficiency that range from organ defects to just constitutional symptoms. And the third is that patients who have phlebotomy just don't feel better.

And one of the benefits that we've seen in the rusfertide Phase III program is the benefits on patient-reported outcomes that patients are reporting.

Great. Well, in our final moments, I just want to ask a forward-looking question. If we fast forward 10 years from now, what do you think will be most different or surprising at Takeda relative to how we see the company.

10 years is a long time. I can't even think. But if I were to think even 5 years, I'll take your question 5 years I think it will be -- everybody is talking about this and you and I have the conversation.

I think it will be how much technology is supplanting our ways of working today. I'll give you one just example in R&D, which is we're about to move into a new building from our Kendall Square -- I'm sorry, from our Central Square location in Cambridge into Kendall. So it will be completed in the next 9 or 10 months. And 80% of our labs in the area will be in that building. 100% of those labs will be digitally enabled.

So the whole workflow of how you take a program from target discovery to candidate, not that every part of it will be digital, but every part of it will have a digital enablement, including everything that we do at the beginning. It will look completely unlike any lab that we see today.

Great. Well with that, thank you so much.

[Interpreted] Thank you very much for taking time out of your busy schedule to join us for the earnings announcement for the third quarter FY '25 of Takeda. I'm the MC, O'Reilly from IR. [Operator Instructions] Before starting I would like to remind everyone that we'll be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause our actual results to differ materially are discussed in our most recent Form 20-F and in our other SEC filings. Please also refer to the important notice on Page 2 of the presentation regarding forward-looking statements and our non-IFRS financial measures, which will also be discussed during this call. Definitions of our non-IFRS measures and reconciliations with comparable IFRS financial measures are included in the appendix to the presentation.

Now we would like to start with the today's presentation. Today, we have Christophe Weber, President and CEO; Milano Furuta, Chief Financial Officer; Andy Plump, President of R&D; and Julie Kim, CEO-elect. They will present, and this will be followed by Q&A. We'll get started right away.

Thank you, Chris, and thank you, everyone, for joining us today. Our fiscal year 2025 third quarter results are confirming the strength of Takeda fundamentals and our ability to maintain disciplined cost management and operational efficiency while continuing to focus on innovation and long-term sustainable growth. Milano will explain our financial results in detail in his presentation shortly.

Fiscal year '25 remains truly a pivotal year for Takeda. We are in a phase of preparing for significant new product launch, making major step forward in our new growth trajectory. In particular, I would like to focus on oveporexton, rusfertide and zasocitinib, which are key assets in our late-stage pipeline that we expect to launch over the next 18 months. Oveporexton is the first orexin agonist to be submitted to the FDA and has a considerable first-mover advantage. Phase III results were statistically significant across all primary and secondary endpoints, demonstrating clinically meaningful improvement on daytime and nighttime symptoms. This reinforce our belief that this medicine can truly transform the life of patient with narcolepsy type 1.

Rusfertide is an hepcidin mimetic that has demonstrated durable and sustained hematocrit control in patients with polycythemia vera or PV. Nearly half of PV patients remain untreated in the U.S. today, and those that are treated still have significant challenge in managing their disease. The Phase III data underscore the potential for rusfertide to transform the standard of care for these patients. We have filed a new drug application with the FDA for oveporexton and rusfertide and are awaiting formal acceptance.

Finally, at the end of last year, we announced positive Phase III psoriasis data for zasocitinib, our highly selective TYK2 inhibitors. Full detail will be disclosed at the upcoming congress, but this once-daily oral therapy offers a compelling profile to help shift the psoriasis advanced therapy market towards oral treatment. Regulatory filing preparations are underway, and we expect to launch zasocitinib in the first half of calendar year 2027. The positive data for all the three programs met or exceeded our expectation. Now we are focused on preparing for launch. We will update the peak revenue potential for these three programs in the future.

Combined, we believe this product could more than offset the anticipated impact of ENTYVIO biosimilar entry from the early 2030s onwards. And in addition to these three, our transformative late-stage pipeline includes five other innovative programs, two of which we have recently added through our strategic partnership with Innovent Biologics. Each of our eight late-stage program has the potential to transform the current standard of care, providing strong and sustainable growth drivers for Takeda well into the future. Andy will share more details about our pipeline advancement later in this call.

Now I will hand it over to Milano, who will discuss our financial results and the outlook for the rest of the fiscal year. Milano, over to you.

Thank you, Christophe, and hello, everyone. This is Milano Furuta speaking. Slide 6 summarizes our Q3 year-to-date results. As you know, this year, we are managing the significant impact of VYVANSE generic erosion. However, if you look at the performance quarter-by-quarter, the headwind from VYVANSE is steadily tapering off as the year goes by, and we are maintaining strong cost discipline to limit this impact to profit. Revenue for the 9 months period was just over JPY 3.4 trillion, a decrease of 3.3% or minus 2.8% at constant exchange rate or CER. Core operating profit, core OP was JPY 971.6 billion, a year-on-year decrease of 3.4% at both actual FX and CER. This is a meaningful improvement from our first half results. Reported operating profit was JPY 422.4 billion, an increase of 1.2%. Core EPS was JPY 428, and reported EPS was JPY 137. Cash flow has been very strong this period with adjusted free cash flow of JPY 625.9 billion, even after the upfront payment of USD 1.2 billion to Innovent Biologics in December.

Slide 7 shows our growth and launch products, which represents over 50% of total revenue and grew 6.7% at constant exchange rate. This is a steady improvement on the 5% growth rate we saw in Q1 and Q2. In GI, ENTYVIO grew 7.4% at CER. Growth in the third quarter was particularly strong as expected, partially due to a onetime gross to net true-up in the period prior year. ENTYVIO Pen continues to be the main driver, helping us maintain leadership share in a competitive IBD market. We are also pleased to report that as of this month, ENTYVIO Pen is now on formulary with all three large pharmacy benefit managers with commercial coverage of more than 80%, in line with competing products. With this progress, we are on track to achieve our full year projection of 6% growth.

In rare diseases, TAKHZYRO has slowed to 2.4% growth at CER. Although we continue to see strong uptake in international markets, this is being offset by the impact of new competing products in the U.S. In PDT, Q3 revenue growth marked an improvement on the first half. That said, we acknowledge some headwinds, particularly in albumin. IG growth was 4.3% year-to-date, driven by subcutaneous IG products, which grew double digits. IVIG sales have been impacted by Medicare Part D redesign in the U.S., which we expect to normalize in Q4.

Albumin has returned to growth of 1.3%, but this is slower than expected due to softening demand in China, which is also putting pressure on other markets where supply is reallocated. While we anticipate additional tenders in Q4 to support an uptick in growth, there's a possibility we'd finish the year below our full year forecast. In oncology, FRUZAQLA continues to expand as well as we roll out global launches. Finally, in vaccines, QDENGA growth has accelerated to 22.1%, driven primarily by Brazil.

On Slide 8, you can see how incremental revenue of growth and launch products and the impact of the VYVANSE loss of exclusivity contributed to total revenue performance. With each quarter, the gap is becoming smaller as the VYVANSE decline was heavily weighted to the first half of the year and the growth and launch products are performing better in the second half.

Slide 9 shows year-on-year core OP performance. Here, you can see that the LOE of high-margin VYVANSE was the main reason for the year-on-year decline of 3.4% at CER. However, we have been able to limit the VYVANSE impact through operational efficiencies with R&D and SG&A expenses, both lower than the prior year. As we explained at the Q2 earnings call, we continue to tighten the belt on expenses, building on the progress of the cost efficiency program we started in 2024. This will be critical as we ramp up investment behind the three new product launches. We will not compromise on the necessary investments for long-term growth.

We also have multiple programs in the late-stage pipeline that will require additional R&D investments in the coming years. At the same time, we will continue to pursue opportunities to offset these investments where possible to minimize the near-term impact on profit. Next, reported operating profit on Slide 10. This was flat versus prior year, with the lower restructuring expenses more than offsetting an increasing impairment of intangible assets. The main impairment item was booked in Q2 related to the cell therapy, and there were no major new items in Q3.

Slide 11 shows our updated full year outlook. Starting with management guidance, we are revising only revenue guidance to low single-digit decline at CER, primarily due to stronger-than-anticipated VYVANSE generic erosion in the U.S. However, our commitment to OpEx discipline allows us to offset the gross profit impact from VYVANSE, and we maintain full year guidance for core OP and core EPS. For our reported and core forecast, we have revised our FX assumptions. As a result, our revenue forecast is now JPY 4.53 trillion, core OP forecast is JPY 1.15 trillion and core EPS forecast is JPY 486. We have also upgraded our adjusted free cash flow forecast.

On Slide 12, we show more detail about the updated revenue and core OP forecast. For revenue, we are reflecting latest momentum of VYVANSE and other products, which includes plasma-derived therapies under TAKHZYRO. However, this is more than offset by FX upside, resulting in a net increase of our forecast of JPY 30 billion. For core OP, continued OpEx discipline fully offset the impact of VYVANSE. We also have FX benefit for a net increase to our forecast of JPY 20 billion.

Thank you, and I will now pass over to Andy.

Thank you, Milano, and hello to everyone on today's call. Takeda is entering an exciting new period of growth powered by our late-stage pipeline. As Christophe mentioned, in 2025, we were 3 for 3, delivering positive Phase III data readouts for oveporexton, rusfertide and zasocitinib. These exciting results are at the high end of our expectations, further strengthening our belief that these new medicines have the potential to fundamentally reshape their respective therapeutic landscapes, bringing transformative benefits to patients in the next 18 months.

Let me begin with oveporexton, our expected first-in-class orexin 2 receptor agonist, which can transform the treatment paradigm for narcolepsy type 1. Approximately 85% of patients in the Phase III oveporexto trials saw measurable improvement, which brought them into the normative range on the Epworth Sleepiness Scale, or ESS, the gold standard measure of excessive daytime sleepiness. That means the majority of patients have the possibility of a normal day. In both Phase III studies, oveporexton achieved clinically and statistically significant improvements across all 14 primary and secondary endpoints with most participants reaching normative ranges. This normalization across such a broad range of NT1 symptoms, including daytime sleepiness, nighttime symptoms, cataplexy and cognitive function is unprecedented.

Oveporexton doesn't just manage symptoms, it addresses the underlying orexin deficiency in NT1, offering patients a single, well-tolerated oral therapy that could restore how a majority of NT1 patients feel and function. We have submitted a new drug application to the FDA and are working to launch oveporexton this calendar year.

Next is rusfertide, our hepcidin mimetic for polycythemia vera. One key data point from the Phase III study is the ability to maintain hematocrit control below 45% through 52 weeks. Real-world data shows that 78% of PV patients experience uncontrolled fluctuating hematocrit, leading to a fourfold increase in the risk of thrombotic events, including stroke, deep vein thrombosis, pulmonary embolism and acute coronary syndrome.

Rusfertide targets the biology upstream, offering more stable and durable hematocrit control and fewer variable swings in hematocrit. Durable hematocrit control with impressive safety and tolerability also led to clinically meaningful and statistically significant benefits to patients' quality of life as measured by the PROMIS Fatigue Scale and myelofibrosis symptom assessment form. By reducing fatigue and other key disease-related symptoms as well as the need for phlebotomy, rusfertide enables patients to spend less time managing their disease and more time engaging in everyday activities. We have submitted an NDA to the FDA and are working to launch rusfertide in PV this calendar year.

And finally, we have zasocitinib, our next-generation TYK2 inhibitor for immune-mediated diseases. In our Phase III psoriasis studies, zasocitinib worked fast with significant improvement in PASI 75 within 4 weeks. Patients, of course, want clear skin. At week 16, more than half of patients on zasocitinib achieved PASI 90 or almost clear skin, and approximately 30% achieved PASI 100 or completely clear skin. PASI scores continue to improve through week 24. These results are at the very high end of reported results for all therapies in development. Zasocitinib is a once-daily, well-tolerated pill that does not have any food interactions. We are looking forward to sharing the complete data at a medical conference in the near future and expect to launch zasocitinib in psoriasis during calendar year 2027.

In addition, we remain confident in future indication expansion opportunities for zasocitinib, including psoriatic arthritis and inflammatory bowel disease. Together, oveporexton, rusfertide and zasocitinib represent three transformative medicines we plan to bring to patients over the next 18 months. They demonstrate the strength of our R&D engine, the speed and quality of our clinical execution and our commitment to delivering therapies that meaningfully change how patients live. Next slide, please.

These first three approvals are just the beginning. I want to highlight some additional bright spots within our late-stage pipeline. Building on our success, a head-to-head study of zasocitinib versus deucravacitinib is fully enrolled and on track to read out in 2026. These data are not required for filing, but will be insightful to further differentiate zasocitinib from other oral psoriasis medicines.

Last November, at the American Society of Nephrology Kidney Week, we presented new IgA nephropathy data from a proof-of-concept study for mezagitamab, our anti-CD38 monoclonal antibody. IgAN is a progressive autoimmune disease that causes irreversible damage to kidney function. Patients receiving mezagitamab demonstrated durable kidney function for about 2 years. This is an incredible 18 months after the initial 5-month treatment period, suggesting a disease-modifying effect sustained long after dosing that could allow for extended treatment holidays, very important for patients with this lifelong disease where many progress to kidney failure within 10 years.

In addition to oveporexton, we are excited about the potential of our second orexin 2 receptor agonist, TAK-360, which is initially focused on patients with normal orexin levels like those with narcolepsy type 2 and idiopathic hypersomnia. Phase II studies in NT2 and IH are enrolling well, and we expect to have data this year to inform Phase III development. Next slide, please.

Turning our attention to oncology. Late-stage highlights include elritercept, our activin A/B ligand trap that showed compelling data in myelofibrosis as presented at this past ASH meeting. Phase II myelofibrosis data showed clinically meaningful improvements in anemia and thrombocytopenia alongside favorable trends in spleen volume and symptoms when added to ruxolitinib. Elritercept remains a late-stage, potentially best-in-class approach across MDS and myelofibrosis.

And lastly, we recently licensed two new innovative oncology drugs from Innovent Biologics, now called TAK-928 and TAK-921. TAK-928 is a potential first-in-class alpha biased IL-2 PD-1 bispecific antibody designed to selectively activate tumor-specific cytotoxic T cells through activation of the IL-2 alpha CD25 receptor while reducing the risk of exhaustion through immune checkpoint inhibition. In early-stage clinical studies, TAK-928 has demonstrated encouraging activity in heavily pretreated immunotherapy and chemotherapy refractory lung cancer as well as in immunologically cold tumors such as microsatellite stable colorectal cancer. We have seen compelling high-quality data in well over 1,200 Chinese patients and consistent early signals from ex-China populations.

We have completed the rapid transfer of data and materials and are now executing with speed to generate global data sets that will supplement the China data shared last year at ASCO. This will allow us to advance TAK-928 to treat a broad range of solid tumors, including non-small cell lung cancer and microsatellite stable colorectal cancer. These go to Phase III decisions will start as soon as 2026 and into 2027. The shared investment in TAK-928 has a 60-40 split with Innovent and is stage gated by these go decisions.

TAK-921 is a Claudin 18.2 targeted antibody drug conjugate that couples a selective antibody with a silenced Fc region to a topoisomerase payload. This approach is designed for potent, tumor-specific delivery of this preferred payload to patients with pancreatic and gastric cancers where unmet need remains high. The engineered Fc silencing reduces off-target toxicity in the GI tract and lung, potentially allowing for more robust dosing and the ability to combine with first-line regimens. Clinical data shows lower rates of GI adverse events relative to other Claudin 18.2 targeted antibodies in development. We plan to develop TAK-921 in first-line gastric cancer and first-line pancreatic cancer.

And now I'd like to turn it back to Christophe and Julie for a few closing remarks.

Thank you, Andy and Milano. Before we start the Q&A, I would like to share that this is my last earnings call as a main presenter. I will be on the full year earnings call, but in a supportive role as Julie Kim, our CEO-elect, take the lead and sets guidance for fiscal year '26 ahead of our formal handover in June. This is part of our intentional and coordinated transition. Starting this month, Julie began taking on more operational responsibilities to ensure that we remain focused on our upcoming launches without interruption.

I would like to thank all of you for the important dialogue we had over the years about our business. I am proud of the work we have done to position Takeda among the global R&D-driven pharma leaders and poised for growth in the years ahead. It has been a wonderful journey, and I am excited about Takeda's future and confident in Julie's leadership in its next era. Julie, over to you.

Thank you, Christophe, and thank you for your leadership and guidance over the last 12 years. Hello, everyone, and thank you for your trust that you're putting in me to lead Takeda's next era of growth. As Christophe shared, our transition has been incredibly collaborative. And one of the benefits of being an internal successor is that we don't have to slow down, we can keep the momentum going and continue to move the organization forward.

To that end, you may have seen our post today about changes to our organizational structure and executive leadership we are making effective April 1. These changes are designed to position us for competitiveness, growth and speed in the years ahead, particularly as we plan for multiple launches. As we implement these changes, we expect the teams will identify opportunities to simplify their work further as we continue to redesign our processes to adopt AI and other advanced technologies. Next quarter, I look forward to taking the lead on the earnings announcement and providing guidance for fiscal year 2026. I value our ongoing dialogue and will stay closely engaged with all of you in the months and years ahead.

Thank you. And with that, I will turn it back to Chris for Q&A.

[Interpreted] [Operator Instructions] Morgan Stanley, Muraoka-san.

[Interpreted] This is Muraoka, Morgan Stanley. I hope you can hear me.

Yes, we can hear you.

Maybe it's too early to ask, but Milano-san, what are your thoughts about the next fiscal year? Contribution from the new product is probably small, and you'll be spending a lot of marketing expenses for those new launches, I understand that. But live situation is coming down, it's getting better, and profit will be maybe flat or slight decrease. And I'm thinking that you can continue to increase dividend. But can you give us some suggestions about what will happen in the next fiscal year?

Milano, please go ahead.

[Interpreted] Thank you, Muraoka-san. Yes, it's a little bit too early, you're right. Our guidance will be provided as usual in May. And the next fiscal year's budget is being finalized as we speak. So please give us some more time. With regard to the current momentum, I believe that we can give you some more information. Top line. Well, growth of growth and launch products versus the LOE impact, I think it's a balance between the two. We expect the growth products and launch products to continue to grow. But as you saw in the numbers in this fiscal year, they are beginning to mature. This cannot be denied. But the gap between LOE and growth and launch products is shrinking every quarter. So we need to see how this balance will work out for the next fiscal year. We are trying to figure that out now. So please give us some more time.

As far as expenses are concerned, this fiscal year, the whole company endeavored on saving the costs, and we will continue to make this effort. But Muraoka-san, like you said, launch costs, three products we launched within 1 year. This means that there will be some load burden. But this uptick is very important for the future growth as well. This is a very important timing for us. So we will be discerning in terms of which investments are necessary, and we will not compromise in investing these launches.

As far as R&D is concerned, this fiscal year, we have been trying to save the costs and also at the same time, continue to drive various projects through the Innovent partnership. We have introduced new assets for Japan and full-scale development is expected to start. Considering that impact, R&D expenses are likely to go up. I think that would be the correct way of reading it. But again, I would like to emphasize that we will continue to tighten the cost wherever we can, and I hope that you can evaluate that as well.

[Interpreted] Do you have any comments about the shareholder return?

[Interpreted] Well, dividend, yes. Progressive dividend is something that we have been talking about for a long time. So this is the basic policy. So either keep it flat or try to increase the dividend. This is the basis. Whether or not the dividend will increase and by how much? Well, in order to decide that we have to look at the core EPS and also reported EPS as well as cash flow generating power and the speed of a reduction of debt-bearing -- interest-bearing debt. So we'll pay attention to those and decide.

[Interpreted] Understand. I have great expectations. I have another question about zasocitinib. UC CD Phase II outcome, when can we expect it? And also what about dosing? Phase II for UC was 50 milligram or 30 milligram? And what about the psoriasis safety data based on that safety data? Can you perhaps comment on this?

So the question on timing for the UC and CD readouts for zasocitinib and which doses we are using. Andy, if you could comment on that, please?

Thanks, Chris. Thanks, Muraoka-san. So we'll have data from both the UC and Crohn's disease Phase IIb studies this year. Both are dose-ranging studies. As we've mentioned -- we haven't disclosed the precise doses, but as we've mentioned, the 30-milligram dose that we've studied in psoriasis and that we'll be registering for psoriasis is the low end of the dose range in IBD. We have reason to believe that higher exposures will be necessary for efficacy in UC and Crohn's disease, and we have significant upwards headroom in dose to study. So those studies are ongoing.

And then your last question was with respect to safety profile for psoriasis. So we've just commented at the top line in December when the Phase III studies read out. We'll be presenting at a medical conference in the near future. You could probably guess which conference we're targeting. And overall, the safety profile that we've seen in both Phase III studies is very consistent with the profile that we had seen previously in our Phase II study.

[Interpreted] The next question is Yamaguchi-san, Citi.

[Interpreted] Can you hear me?

[Interpreted] Yes, we can.

This is Yamaguchi from Citi, I have two questions. First of all, the first one is more of a broad question because MFN situation or medical policy in the United States seems to be are coming down because the major companies are now settled with the U.S. comment on MFN. But a Japanese company, including your company, are still excluded from this discussion. But what do you think about this sort of activity, which you need to do regarding MFN or U.S. policy in the near future? That's the first question.

My second question is regarding the organization change, which you announced today, especially on the strategic portfolio development, which it sounds like you're trying to speed up on the some of marketing activity in those areas. Especially in the U.S., U.S. marketing is a key for next few years. And it depends on the products, but your marketing activity in the past are not necessarily executing better than expected, to be honest. But how are you going to change, especially in the U.S. marketing organizations or activities in the near future through the Kim-san's roles or our CEOs roles in the near future? Thank you. Two questions.

Thank you, Yamaguchi-san. So the first question on MFN and latest U.S. policy updates. The second question regarding the organizational updates that we announced today. So I'd like to call on Julie to address both of those questions, please. Julie?

Yes. Thank you, Yamaguchi-san for the questions. First, in regard to MFN, as you've noted, the number of companies, 17 companies that had originally received the letters from the White House, they have all gone in for negotiated agreements in regards to how they will approach MFN, how they're going to be managing tariffs with the relief that they received and further investments in the U.S. So since those agreements have been made, there were also releases from the government in terms of the generous model, which details how these agreements can be actually implemented through Medicaid. And there have been a release of GLOBE and GUARD CMMI demonstration projects for commentary by the public. So at this point, we have assessed both the impact of generous and looking at the potential design of the two CMMI products on Takeda and Takeda portfolio. So we are evaluating those impacts and taking necessary steps to address that within our approach to MFN.

But let me end by saying that in general, MFN is not an approach that we support. Having price controls and importing one component of health care systems that have very, very different structures does not make sense for the U.S. and can impact future innovation. So we are not in favor of MFN, but we will continue to address the challenges that may face Takeda going forward.

In regard to the organization changes that were announced today, you will see that from a commercial standpoint, there are basically two key structures that we are trying to focus on. One is a therapeutic one. And so you will see that the oncology business unit is still a separate business unit. Both Andy and Christophe have talked about the assets that we have brought in, particularly the Innovent ones will be a key part of our oncology portfolio, and we are very much looking forward to launching rusfertide later this year. So maintaining our focus on oncology to drive that growth and the potential that we have in our pipeline now is absolutely critical.

And then for the upcoming launches, creating two primarily geographic focus, one in the U.S., maintaining the U.S. focus given the size of the market and the dynamics that exist that we have to manage, that is part of being able to set ourselves up for success going forward in terms of the commercial approach to the U.S. as well as the international markets. So what may not be as visible through the org changes that are announced is the work that we're doing in terms of our marketing excellence and sales excellence and commercial operations. So we are working on all those aspects, again, to ensure that we are ready and can deliver successful launches going forward. Thank you.

For the next question, I would like to call on Stephen Barker from Jefferies.

Steve Barker from Jefferies. I have two questions, both about ENTYVIO. The third quarter sales were very robust. The global third quarter sales expanded 17% year-on-year on a reported basis, much better than the 3% growth reported in the second quarter. You said that you are now confident that you can achieve your 6% guidance for the full year, but that would imply a 2% decline year-on-year in fourth quarter sales. So would you agree that your -- that there's a decent chance at least that you can beat the current guidance for full year, 6% growth. And if you could just talk a little bit more about what's driving the good performance in the third quarter and if it is something that can be sustained into next year? That's the first question.

And then second question. A couple of days ago, CMS announced that ENTYVIO has been chosen as one of the drugs for the third cycle of IRA price negotiations, meaning that it's likely to get a substantial Medicare price cut from the start of 2028. Any comments on how big that price cut might be? And if you can still achieve your peak sales guidance of $7.5 billion to $9 billion even with the price cut?

Okay. Thank you, Steve. So the question on ENTYVIO sales trend, impact of IRA inclusion and the implications on peak sales. So I'd like to ask Christophe to start with this one and then perhaps Julie can add some comments as well. Christophe? Sorry, Christophe, I think you might be muted.

Thank you, Steve. Obviously, ENTYVIO is operating now in a very competitive market. We know that, but we are pleased by the Q3 performance. One important point is that we have improved our coverage situation in the U.S. All the big 3, now PBM, are reimbursing and covering ENTYVIO Pen. Took a while, but we have now a coverage at the level of our competitors around 80% since January. So it's quite recent. So we are hopeful that the Pen will continue to progress in the U.S. as it has progressed in other countries. And long term, we still aim to have a 50-50 split between the IV and the Pen.

So overall, a good performance in Q3. Long term, we project ENTYVIO not to gain market share, but to remain stable and to grow at market pace basically. While the Pen is developing, that's our current estimation, but the market is changing quite a bit, but good performance for sure in Q3.

And then Steve, in regards to the IRA selection of ENTYVIO. As we've shared in the past, this was anticipated. And so we've been preparing for this eventuality. As you know, from a timing perspective, we have a period of time in which we have to confirm engagement in the negotiation. And then towards the end of the year, we will actually find out what price will be set. I think you are also aware, it's not really a negotiation, but we will be submitting our best evidence package to support ENTYVIO. If you look at what's been happening over the previous two cohorts, the second cohort had higher price cuts than the first cohort. So it is too early to say whether that trend will continue into the third cohort or whether it will be similar to the second cohort. So it really depends on where we'd land with the final pricing on ENTYVIO in terms of when that peak sale could -- sorry, peak revenue could be and also if we end up in the 7.5% to 9% or not. So we will update later once we understand what our pricing situation will be for ENTYVIO.

[Interpreted] Next question is from Matsubara-san, Nomura Securities.

[Interpreted] This is Matsubara, Nomura Securities. First question is about TAKHZYRO. On a CER basis from the second quarter, the growth rate seems to be slowing down. And is it affected by the competitor DAWNZERA? And the transition from TAKHZYRO to DAWNZERA and HAE template showing some 65% decrease. So what about the prescription rate in existing patients or new patients? Could you comment on those? Second is, as Milano-san mentioned, oveporexton and zasocitinib will be launched and also R&D spending -- more spending will be necessary. And in the midterm viewpoint, as you try to increase the operating profit, how are you going to take measures?

Thank you, Matsubara-san for your questions. So the first around recent TAKHZYRO trends -- prescription trends in the U.S., I'd like to ask Julie to comment on that. And then the second question, looking at our outlook for profit over the medium term. I'd like to ask Milano to comment on that, please. First, Julie?

Yes. Thank you for the question, Matsubara-san. When it comes to TAKHZYRO, I will share a few comments. First, in terms of the overall market, this is a market that has been maturing. The diagnosis rate is high and the penetration of prophylaxis treatment has been high as well. So TAKHZYRO continues to be the gold standard for HAE patients. And you are correct that we have seen an impact of the launches of the two competitive -- recent competitive entrants. And so we are seeing an impact in terms of new starts from these new competitive entrants. But I also want to point out that part of the lower growth is also due from the impact of Medicare Part D redesign that we are experiencing a bit higher impact from that in the U.S. than anticipated.

Now when it comes to long-term efficacy, if you look at the real-world evidence that we have for TAKHZYRO, no other product is able to demonstrate the level of efficacy that we have when you look at the data from an attack perspective. We have patients that are attack-free for over a year at any given point in time. And so from an efficacy standpoint, our real-world data for TAKHZYRO, it can't be beat. So that is something that I would like to highlight, and it's something that we continue to defend and support from a TAKHZYRO standpoint.

[Interpreted] Thank you very much, Matsubara-san. And I'd like to answer to your second question. At the beginning as Muraoka-san also asked, and I mentioned about the pressure of overall expenditure increase. And therefore, I'd like to touch upon the potential contribution of new products to the profit. And this is a general comment that whenever new products come out, then in the second year or the third year since its launch, we will see a contribution to the profit. It depends on the timing of the launches. Therefore, it is difficult for us to say anything concrete whether it's going to be next year or the year after the next and how much. But amongst the three products, oveporexton's uptake after the launch is expected to be fast. Whereas zasocitinib will have to play in a very highly competitive market. Therefore, I think for zasocitinib, I think we need to take time to monitor.

And rusfertide is in between. It is a highly innovative product. But at the same time, the market access may not necessarily be so easy. Therefore, how that will demonstrate the uptake, we would like to monitor. But the speed of uptake will be impacting on to the timing that we start to see the product contribution to the profit. And also not just these three products, but five new pipeline assets, readouts are coming. And in forthcoming 5 or 6 years, they will continue to be launched. And as a result, overall, I think that the overall profit level should be able to be enhanced. At the same time, not just the core OP, but the reported operating profit is also monitored. For instance, VYVANSE, the intangible asset, the amortization will be complete. And as a result, there will be also a positive contribution in that sense. Thank you.

Moving on to the next question, I would like to call on from TD Cowen, Mike Nedelcovych.

I have two. My first is also related to the IRA impact on ENTYVIO. I believe it is Takeda's base case that ENTYVIO Pen will be included in the IRA price negotiation. But I'm curious if that is a completely settled matter or not. Is there any chance that ENTYVIO Pen is ultimately excluded from the IRA price negotiation? That's my first question.

And then my second question relates to the partnered AC Immune asset in Alzheimer's. It looks like data may be anticipated in mid this year. Should we expect that to be the time when Takeda decides if it wants to opt in or not? And Andy, I'm curious to hear your thoughts more broadly on prospects for Alzheimer's disease prevention or delay based on early amyloid plaque clearance? What are your general thoughts on this approach?

Mike, so I think the first question, Julie, can comment on IRA ENTYVIO impact on -- potential impact on Pen. And then the second question to Andy on the AC Immune partnership and AD in general. Julie?

Thanks for the question, Mike. And in terms of the negotiation with the IRA, we do expect that Pen will be included.

And Mike, on the AC Immune program, so we won't have data this year to drive a decision that will come in subsequent years. And thanks for asking more generally. Of course, I've been working in this industry for almost 3 decades now. And the first project I worked on was a project of a gamma secretase inhibitor designed to reduce A-beta production. It's been one of -- to me, one of the most exciting and promising, but also one of the most challenging areas in our industry.

I'm a big believer that if we could clear a beta plaque early in the longitudinal course of Alzheimer's disease that we could drive even greater benefits than what we see from the passive antibodies that have been used in demonstrated efficacy. So we're quite excited about the vaccine program. Of course, the challenge with the -- historically with the vaccines has been threading the needle of safety and efficacy. We think we have a shot with the -- with our AC Immune partners and still working towards that.

[Interpreted] The next question is Wakao-san, JPMorgan.

[Interpreted] This is Wakao, JPMorgan. I have two questions. Firstly, regarding PDT, how do you assess the third quarter progress on PDT? Compared with your guidance, PDT progress seems to have been somewhat slower. And could you share your outlook for PDT in fourth quarter and next fiscal year? This is the first question.

And second question is about zasocitinib. Should we expect zasocitinib Phase III data to be presented at AAD in March? If so, what key aspects should we focus on? As Icotrokinra and [indiscernible] programs have shown favorable data or so, where do you see zasocitinib's key point of differentiation?

Thank you, Wakao-san. So the first question on the PDT business performance and outlook, I'd like to ask Julie to comment on that. And the second question on zaso data, where will it be presented and what should we focus on in that data, I'd like to ask Andy to comment on that, please.

Thank you for the question, Wakao-san. In regards to PDT, as Milano was sharing in his part of the presentation earlier, we do see some slowdown in demand, particularly in regards to albumin in China. As you may be aware, the Chinese government has put in place utilization guidelines that are impacting demand for albumin in China. And it will -- it has slowed down the growth, and it will take time for growth to return in China. When you look at the overall outlook for PDT overall, there, we still believe we will have mid-single-digit growth for this year as previously shared and longer-term outlook is still strong. The quarter-to-quarter, as you know, because there are lots of variabilities in regard to tender timing, et cetera, we do -- as Milano mentioned, we do believe that there is a possibility we will have a shortfall, particularly in regards to albumin. But overall, we will be meeting the forecast for PDT.

So could you also comment on the immunoglobulin?

Sure. Yes. From an immunoglobulin perspective, again, long-term growth, we believe will remain steady. And from a short-term perspective, we are expecting to be on forecast for immunoglobulin.

Wakao-san, this is Andy. So thank you for your question on zasocitinib. So we haven't disclosed yet the conference that we'll be presenting at, but AAD certainly is like is a possibility. I just suggest that you watch out for the abstract when they're released in mid-February for AAD.

And then in terms of what to look for, it's pretty straightforward. It's fast onset of action. It's clear skin and it's ease of administration. We have a once-daily oral pill that's well tolerated with a strong safety profile. And then when you double click, you'll see that in the two Phase III studies, we hit on every single primary and secondary endpoint, and that's 44 total endpoints. So there'll be a lot of data that will be shared, and we're quite excited to get it out there.

So what is our competitive advantage?

Well, it's has -- as we mentioned over the last hour, it has an efficacy profile that at 16 weeks is at the very high end of what's been seen for oral agents. It's ease of administration without having any food effects and it's the overall profile, and it's the rapidity with which we generate clear skin in an oral agent. We believe and we think the data will demonstrate that it's as good or better than any other oral option in the moderate to severe plaque psoriasis space.

Okay. I'm looking forward to see the data.

Okay. Thank you very much, Wakao-san. I think we have just time for one final questioner. So I'd like to call on Tony Ren from Macquarie.

Yes. Thanks for the chance to ask the last question. My first one, and I'll go back to the -- again, for Andy, the zasocitinib regulatory pathway. So assuming that you will present the data at AAD in March, the standard FDA review takes about 10 months. So do you think you can actually launch it earlier than the 18 months of a time line guided? Are you being a little bit too conservative in estimating the time line? So that's my first question.

The second one is probably to Julie about the ENTYVIO biosimilar. Have you -- as you're thinking about the biosimilar entry changed because of the subcutaneous Pen, I noticed that a recent conference in San Francisco, you guys are now saying 2030 and beyond. So just want to confirm whether the launch of the Pen and the wide adoption of the Pen has anything to do with the biosimilar entry. Yes. So that's my second question.

Okay. Thank you, Tony, for your questions. So the first on zasocitinib regulatory pathway and potential launch timing, Andy can comment on that. And then the second question on the ENTYVIO biosimilar entry timing, I think Julie can comment on that, please. Andy?

Thanks, Chris. Thanks, Tony. So just to put perspective on the filing time line. So there are three elements that define the time line for filing. There's the Phase III studies, which we've completed. Those are ready to go. There's the overall patient safety database. So we have to accrue safety in about 1,000 patients on active drug for a full year, and then the third is the CMC package. So when you put all three of those together, Tony, we're looking at a submission that's likely to occur sometime in this summer. And then, of course, the time line for the review will be something that will be in dialogue with the FDA and once we've made that submission.

Thanks, Tony, for the question on the ENTYVIO biosimilar timing. So we have not really changed our timing expectations here. As we've shared previously, we do have patents that cover various different aspects of ENTYVIO that go out to 2032. But as you are also well aware, there are biosimilars in development, and they could file with legal challenges -- I'm sorry, they could file and we would then pursue legal challenges. So that's why the timing could be 2030, 2032, and that's why you hear us saying that.

Also from an overall market attractiveness perspective for ENTYVIO, as now ENTYVIO has been selected for IRA negotiation. The pricing expectations for biosimilars will also be impacted by that. Thank you.

Thank you, Tony, for your questions. With that, we'd like to bring this call to a close. Thank you all very much for participating in the call today. This concludes our Q3 earnings call. Thank you. Good night.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Hi. Good afternoon. Welcome to JPMorgan Healthcare Conference. I'm Seiji Wakao, Japan pharma analyst. It's my pleasure to introduce Christophe, CEO of Takeda. Welcome him to the conference. Christophe, please go ahead.

Thank you. It's really a great pleasure to update you about Takeda's situation and outlook. I'm really excited and delighted, especially because we have good news to share. So it's a great time.

So 10 years ago, I joined the company in 2014, we decided to really focus on innovation. Our mission is to discover and deliver life-transforming treatment. And for that, of course, you need scale because it's expensive to develop this treatment. And you need to have an R&D engine, which we started building, and you will see the outcome today. A few years later, we decided also to embrace digital and technology, to embrace digital and technology, and we will not talk a lot about that today, but I can tell you that it is transforming the company as we speak.

We moved early. Back in 2018, we decided to move all our data to the cloud. And now in R&D, in manufacturing, in our commercial operation, in our back office, technology, digital AI is transforming the company. We work faster, better, more intelligently. So it's really important. In 3 years, 4 years, you will see a divergence between the company that embrace it and the company that didn't embrace it. It's very clear in our mind.

So today, Takeda is $30 billion revenue company. More than 50% of our revenue comes from this country here from the U.S. It used to be less than 20% 10 years ago. We are -- our portfolio is comprised of a quite large portfolio of very innovative medicines. Over the year, we sold our branded generic business. We sold our OTC business, again, to focus on innovation. We are present in 80 countries. We have our global headquarter in Tokyo, with a very big presence, a big hub in Boston. And we invest about USD 5 billion per year in R&D. And we decided to focus on a few therapy areas. And we -- our research team focused on these few therapy areas. Our development team focused on these 3 therapy areas: GI and inflammation, neuroscience and oncology.

So we are at a very pivotal moment Why? Because in the last 5 years, we had a lot of generic exposure. We actually lost 20% of our 2021 revenue during these 5 years. We were able to offset almost all of that through our growing portfolio of products. But we are now at the end of that cycle. And so in the last -- in the next 5 years, our generic exposure is much lower, about 1/3 actually of what we have faced in the last 5 years.

We have not -- we have launched new products in the last 5 years, but they were not -- they were very innovative medicines, but not with a huge revenue potential. But we have been successful at launching this product. We are entering a phase now of very significant, very material new product launches. And this is what I will focus on today.

And I talked about digital and technology, but that's something that we have prepared in the last 5 years, we'll start to really see the impact in the next 5 years.

And last but not least, I'm retiring from the company in June this year. Julie Kim, who is here, will succeed me. So we are also organizing this transition.

So here is my focus today. It's all about the pipeline. It's all about the new product launch. And we have now 8 late-stage assets. all of them potentially launched before the end of the decade. And they are all life transforming assets compared to standard of care. So I won't go through all of them 1 by one. I will focus on the first 3 because we had the Phase III readout for these three but it's still worthwhile to spend a bit of time on these assets. First, you can see that many of them have a breakthrough therapy status. Many of them are also orphan drug. Takeda is very strong in rare disease. We know how to help patients with rare disease. We know how to commercialize product in the rare disease space.

So I'll start with the bottom right. TAK-928, TAK-921, we just added these 2 assets by doing a partnership with a Chinese company called Innovent. We are very excited about these 2 assets. There is a third one actually which is more in an early stage. So it's a very strategic partnership with Innovent. TAK-928, it's an immuno-oncology asset. It's a alpha-biased IL-2/PD-1. The alpha biased is very important because there has been other IL-2/PD-1 developed in the past, and they had some toxicity issue. We believe that because if it's focused on alpha-biased IL-2. We have a better therapeutic window. We can have this efficacy with less city and safety.

So we have seen a lot of data among Chinese patients very exciting data, and we will start the Phase III development of these assets. Starting with non-small cell lung cancer, but obviously, it's an immuno-oncology asset, so it could really go into many, many indications in the future. Very, very important asset, potentially again, launch before the end of the decade. So that's a very crucial asset in our oncology pipeline.

TAK-921 is a CLDN18.2 ADC. We'll focus on gastric cancer first, and then we could go into different line. It's also an asset that could enter into Phase III outside of China rapidly. So that's 2 oncology assets, which are really improving our pipeline in oncology for have followed Takeda for a while. We have not been super successful in oncology for different reasons. I mean, that's part of what we do, right? But today, we have a very different oncology pipeline between these 2.

And elritercept, for example, that we are developing in MDS, starting second line could move into first-line later. We think it has a very interesting profile compared to existing therapy. We believe it could be efficacious in RS negative, for example, patients. So that's our three oncology assets in late stage.

Fazirsiran is an RNA product to treat alpha antitrypsin deficiency liver disease. It's in Phase III. It's a partner with our head, and it could really transform the life of the patient with this disease. There is not much treatment available. Mezagitamab, it's a CD38 antibody. We think it has a very attractive profile, very potent profile. We have disclosed some data which is very, very exciting for IgA nephropathy and immune thrombocytopenia.

So now I will focus on these 3: oveporexton, rusfertide and zasocitinib because we had the Phase III readout. We are planning to launch this asset in the next 18 months. So let's start with oveporexton. So oveporexton is our first orexin agonist that has been filed. So we just filed the product. And we expect to launch in the second semester of 2026. The Phase III readout has been, in fact, slightly beyond our expectation. In terms of the efficacy profile, all the primary endpoints, secondary endpoints were met. This is really a compound that is changing the life of the patient. And we see that and one anecdote here is that all the patients which were -- who were enrolled in the clinical trial decided to carry on after. They don't want to stop the treatment because it is really changing their life. So it is clearly a step change.

It is a product that is used in 2 doses, first those are in the morning, second dose before lunch. And that's -- we have designed that to make sure that we have a pharmacokinetic profile, which mimic the natural ex profile where you peak in the middle of the day and you don't want a lot of orexin level before going to sleep. So it's really important to select the right dose but also to have very appropriate pharmacokinetic curve in order to manage well the wait period and then making sure that you don't have insomnia and people can go to sleep in the evening.

So very transformative and this is an opportunity, obviously, for us to launch early. There are about let's say, 100,000 patients with narcolepsy type 1 in the U.S., half of them are diagnosed. And what I can share with you is that the level of satisfaction is very low right now. So if you interview patients, they are struggling. The use there on poly therapies. They have a lot of issues side effect. There is a very high level of unsatisfaction and it's a young population. They want to be active. So we think that we can really deliver that for them when we will launch this product. It's really transformative.

At the time when we did our R&D Day back more than 1 year ago, we estimated that our peak revenue for this product could be between $1 billion to $2 billion. We think it could be higher than that, actually. Looking at the Phase III data, again, the Phase III data has been better than what we expected in terms of the number of responders and the efficacy that we have seen, the tolerability. So very, very excited with this product and with this launch. We don't think -- I mean, market access is always a challenge, but this is actually the standard of care today are relatively recent product. So we don't think -- I mean, we think we should manage market access in order to have a rapid uptake with this product.

Rusfertide, the second one, also launched in the second semester of 2026. This is also a product that we filed just before the end of the year last year, before New Year. It's a hepcidin mimetic to manage polycythemia vera and again, here, the data has been very compelling. If you look at the hematocrit control, it's a type of beautiful data that you always look for when you develop new products, a very, very high level of efficacy, very strong control over time. If you look at the number of patients we don't need a phlebotomy because our control with the product, it's also very, very high. So that's a product, again, that's also a product that should completely transform the standard of care.

And here, it's a market where also about half of the patients are treated, and they follow treatment path. -- about 78% of the patients are uncontrolled. So they start with phlebotomy. And then when they cannot control the disease anymore, they move to hydroxy urea. And when they do not control luxury, they move to ruxolitinib and eventually, the combined with Ropeg-interferon. And so that's really interesting because in theory, we could actually be first line.

When you look at the level of efficacy that I have just shown. In theory, we should move into first line should treat all these patients. But obviously, here, we'll have to demonstrate that it's cost-effective that it is worthwhile to displace phlebotomy, but phlebotomy is very cheap because it's very old. And so we'll have to see how we enter this market and how progressively we treat the patients. But clearly, transformative compared to the current standard of care. So here, again, a very, very high potential for this product.

The last one I want to really highlight is zasocitinib. So zasocitinib, we just got the Phase III readout. We have not disclosed all the data. We'll do that at an upcoming congress. It's a TYK2 inhibitor that we are developing first in psoriasis. We are also developing the product in psoriatic arthritis, and we also are in Phase IIb in IBD. And so very positive data. I will not disclose too much here because we want to, again, make that presentation in Congress. But what I can say is that we have demonstrated that the TYK2 class, if you have the right molecule at the right dose, you can really obtain a very high level of efficacy.

And so for example, more than 50% of the patients reached PASI 90. About 30% of the patients reached a PASI 100, meaning clear skin. And that was -- that's not something that they can get with current overall option. And so we think that this is really something that could transform the psoriasis market in the future. So very excited about that. Again, there's been a lot of talk about the TYK2 class. The first product did not achieve this type of level of efficacy we have been able to demonstrate that you can. Again, if you have the right products with the right level of selectivity, which allows us to increase the dose and have the right dose, and this is what we have demonstrated here.

So here, in terms of launch, the challenge is to change the paradigm of oral treatment. The overall segment has been stagnant for many, many years. About 16% of the patients, psoriatic patients today are treated by oral. I think the challenge for us and frankly, for another company, which has another roll, which has a comparable efficacy. The challenge is to really create an option for the patients to start when they cannot -- when the traditional therapy is steroids, topical do not work anymore for them instead of going directly to a subcu or an IV type product where they can get very strong efficacy. Here, we are creating a new option to start with an oral treatment. And we believe that we can double the size of the overall segment in the coming years.

Again, we will not be alone. There is another class. There's another oral, which has comparable efficacy, which actually we welcome because it will be quite a challenge to change that paradigm and to create this oral option before moving to subcu and IV. So for zasocitinib, because of this Phase III readout, very excited to launch. At the time, we expressed a peak potential revenue between $3 billion to $6 billion in psoriasis and psoriatic arthritis, we are committed to it. We believe that with this type of data, we can achieve that. So very excited about it.

So that's really the -- our agenda for the next 2 years, 3 years is to launch these 3 products. It's quite an endeavor. I mean, for a company of our size, to launch so many products at the same time. It's very, very exciting. And if you look more long term in, from 2030 onwards, our lead current product called ENTYVIO, which represent about 20% of our total revenue today will start facing biosimilars in the U.S. So for us, it's very important that with these 3 products, we are able to offset that decline, which will start in 2030. So timing-wise, it works very well.

So you have oveporexton, $2 billion to $3 billion peak revenue potential; rusfertide $1 billion to $2 billion; zasocitinib, $3 billion to $6 billion. So you are talking about let's say $6 billion to $10 billion, let's say, revenue generated by these 3 products. ENTYVIO today is a $6 billion product. continue, it is growing still. But you can see that with these 3 products, we will be able to offset the decline of ENTYVIO from 2030 onwards.

Now on top of these 3, we have the 5 others that I mentioned earlier, which will add to our growth potential. These 5 other products will also be launched before the end of the decade. So I think that's a very important timing. As you know, all pharmaceutical company have their cycle with patent clips. So for us, the challenge. The next challenge is from 2030 onwards with ENTYVIO, with the launch of these 3 products, we are able to manage that. And then we will have the 5 others. Hopefully, the Phase III readout will be as good as these three, and we will be able to sustain our growth in the future.

That's what I wanted to share with you today. And now I'm very happy to have our Q&A, and I'm inviting my colleagues to join me. Thank you very much.

Thank you, Christophe. I will start Q&A session. From here, Milano Furuta, CFO; Julie Kim, President, U.S. business; and Teresa Bitetti, President, Global Oncology Business will be joining us.

So first question is for Christophe. Christophe, this will be your final JPMorgan presentation as CEO of Takeda. What are your reflection in the past 12 years?

Well, it has been a long journey for sure. But I'm very proud, frankly, of the transformation of the company and how we were able to, one, globalize the company, but also focus on pharmaceutical and innovation. And when we think about it, when I joined the company, we were in the branded generic business, quite big. We were in the OTC business. We were in the biopharmaceutical, too. Our R&D was focusing more on follow-up and me-too product across many, many therapy paths with a focus on small molecule.

And so we decided to pivot to more innovation, which I think is what is necessary today to win in the current environment. And also, we moved away from the branded generic business, and that was a good move because obviously, the branded generic business has collapsed since in many countries, and now you have like innovation and generic. And I think it was very more to exit that business.

On the people side, just to -- when I joined, we had 2,000 employees in the U.S., and now we have 22,000. So we really also globalized the company. And we remain by far the leading largest company in Japan. But that's not how you win. You win by being strong globally and especially in the U.S. in that pharmaceutical space.

So I think that has been a huge transformation, and we were able to do that by keeping our values and our culture very strong. So that's also something I am proud of. And of course, internal succession, which is not easy to achieve. And I'm very, very proud. I'm glad that Julie is succeeding.

Okay. Next question is for Julie. What do you see as key focus area as you prepare for the CEO role?

Well, you just heard from Christophe the fantastic results that we had in our Phase IIIs last year. So absolutely top priority is now launching these 3 assets successfully and hopefully, the ones that come behind it, too. So 100%, 150% focused on making sure we can successfully launch these new medicines.

Please raise your hand if you have a question, and we wait for microphone. Okay. So I'd like to discuss about new products. You presented strong data for oveporexton, rusfertide, and zasocitinib. Could you provide more detail on the expected launch up and the pace of revenue up for each of these assets; zaso, rusfertide and oveporexton?

Are you talking data on launch plan?

Launch plan.

Launch plan, yes. So as I mentioned, I think there are different markets different characteristics. I mean, the products are all innovative, but you have very different situations. So let's start with zaso. Zaso, it's a very competitive market, very mature, a lot of competition, obviously. So first, you need to make sure you have an entry ticket in this market, you need to have the right level of investment. You need to have the right market access strategy, which, of course, is easier when you have compelling data in terms of efficacy and safety, which we have.

But that's a very competitive market. It's a market share game here. And I think we need -- we have a strong presence in the U.S. We can do it, but it's probably the most of the 3. It's the most competitive and, let's say, expensive launch, for sure. So that's why it was absolutely critical for us to have the right level of efficacy because you cannot succeed in a market like that if your product is not highly competitive. We think it is. So again, here, it's all about the overall segment and convincing prescription prescribers, physicians and patients that they should try an oral before potentially going to an IV and subcu. And I think that's very, very critical.

Again, there will be -- at the moment, we see 2 overall product with this level of efficacy and safety. It's very fine actually. Because the challenge again is to convince that overall is an option before going to an out. So that's really where the competition is. Rusfertide, Teresa can talk about it because he will be the one launching the product.

Yes. No, no. I mean rusfertide, it's a very exciting product in the area of polycythemia vera. In today's world, it's really phlebotomies is where patients start. It is a very crude tool in many ways, and it comes with significant burden on the patient in terms of going into the clinic. It's a rather painful procedure. And it is only done, I would say, intermittently. And so the key thing with polycythemia vera is to get that hematocrit level below 45%. And so in between phlebotomies, you know that there's a fairly high level of volatility in that.

And the beautiful thing that we have seen in the data with rusfertide is that you have rapid, durable and consistent control. So a big opportunity for patients to the one thing that we've seen with this data, too, is that it can be done as a single agent or can be used in combination. So today, patients will typically start on phlebotomies. And then from there, they will add on hydroxyurea and then they'll add on other things as they move through the treatment flow. And so it's an exciting asset.

We're looking at really a prevalence market. So it's not as though there's a lot of incidents coming in every year, but patients tend to stay on the treatment that they're given. And so the opportunity here for us is to make sure that we educate and that patients begin to understand the benefit that this will bring them. It has also been very clear from the feedback we're getting that physicians clearly see the innovative benefit of what this drug is going to bring to the market.

And then oveporexton will be a slam dunk because I think that there is so much unmet medical need and satisfaction among patients that they will try. And then after that, there's a need to choose the right dose, but also they can adapt when they take the second dose, is it a bit later, a bit earlier in order to, again, measure pharmacokinetics and manage their efficacy, but also side effects as well, tolerability. Because the main side effect we see in the data is insomnia, and that's quite -- you can understand easily.

So I think that would be the challenge is to help them and help the physician to tailor a little bit the treatment so that they can have the maximum efficacy. And I think based on the data we have seen in the Phase III, it would completely transform their life. And it's like immediate. You don't have to wait for 1 week. I mean it's like this, it's like a switch. I think it will be very, very impressive.

Okay. Any questions on the floor?

Very nice, wonderful to see the evolution and the growth of Takeda. My question is a bit more about your oncology pipeline. A couple of questions there. Number one, what is it about your IL-2 PD-1 bispecific that you believe that can provide a differentiation my not just use IL-2 plus a PD-1? Why do we need to bispecific? That's question number one.

Question number two, thinking about your ADCs, why did Takeda look at a low DAR, if I understand correctly, these are DAR-4 syndecans and when the majority of the field is going towards a higher DAR. So those would be the 2 questions about your emerging oncology portfolio. And perhaps do you think there's a possibility for a combination of targeting with IO and ADCs?

So for the first question, perhaps Andy can explain the alpha-biased IL-2/PD-1. The alpha-biased is the most important differentiation here. And then perhaps the second question, Teresa.

So thank you very much. And it's just almost a plant. It's such a great question for us. So firstly, there are no alpha-biased IL-2 agonist right now on the market. And so of course, one could imagine the potential for combining a PD-1 inhibitor in an alpha-biased IL-2 activator. These don't exist. I think with that said, there are potentially mechanistic benefits of linking the 2 together. So the alpha-biased IL-2 that our partners at Innovent made, there's a selectivity for effector cells in tumors is there CD25 expressing T cells that when activated will attack the tumor. IL-2 alpha is also expressed on T regulatory cells. So when activated, those will suppress an immune response.

So clearly, you want to go after the former, not the latter. By having the bias in the pharmacology that helps. But the second opportunity is by linking it to a PD-1 you're carrying that molecule into the tumor because the tumor cells that express PD-L1 and so you're localizing that alpha-biased IL-2 to the tumor. So that's a distinctive antigen. it's a unique molecule, and the data as Christophe described, is just incredibly exciting.

Yes. And actually, maybe before you talk about the ADC, I'll expand a little bit on our excitement with that asset. Because, I mean, the #1 relevance, obviously, is the mechanism is really interesting, but we've got 1,200 patients that have been treated, and we have seen in those 1,200 patients, the safety profile payout as well as the efficacy. And the exciting thing commercially is that there's a large unmet need in IL refractory and given the way that this activates the immune system, there's enormous potential here to address that piece of the marketplace.

And also as you move into sort of earlier lines, that safety profile allows you to combine with other agents as well. So in some ways, I think of this alpha-biased IL-2/PD-1, we certainly know IL-2 works, right, for sure, a long history there, but we don't have the toxicity, and we certainly know the PD-1s work having that combination is very powerful. And I think of this as like a pipeline of product in terms of the potential of where we could develop this agent.

And then on your second question, you're obviously quite sophisticated in this space. There are multiple different elements that define the efficacy of an antibiotic drug conjugate, one of which is what you referred to, which is a drug-to-antibody ratio. And while many ADCs have higher ratios than what is now TAK-921 or CLDN18.2 antibody coupled with a topoisomerase inhibitor. It's not really the number of toxic molecules. It's how they're placed, how well they're delivered to the tumor and how stable they are via the linker because we're really trying to balance efficacy and safety.

And while many, many programs are using CLDN18.2 as a target, there's something unique about TAK-921 because of the DAR, because of the fact that we're using a topoisomerase inhibitor not a tubulin, which is very consistent with the need for patients with pancreatic gastric cancer. And third, it's an Fc that's not activated. And so the safety of this molecule, tolerability is unlike anything that's been seen in this class before. So we're very excited about both molecules, the pipeline and the product and then the more specific activity of TAK-921.

I will perhaps add because it might be interesting for you that this is a strategic partnership with Innovent. It's not just a buy or in licensing. So we are codeveloping especially the alpha Bioscience to PD-1. And so it is for us, also a way to create a partnership with 1 of the most competitive Chinese company right now. we did a holistic review of the biotech space in China, the 2,200 biotech companies in China. And we had a short list and Innovent was part of this shortage. So for us, it's 3 molecule, but more importantly, it's a partnership that could lead to potentially further collaboration. But it's a way to have if you like, a foot in the Chinese ecosystem.

Next question is for Milano-san. So as you look ahead to fiscal 2026 and beyond, investment required to support launched 3 new products. How do you balance investment in launch preparation and R&D with your margin commitments?

Yes. Thank you, Wakao-san. So yes, we have been doing a lot to manage the margin. Even under the loss of exclusivity, we have big -- we are facing in loss of exclusivity, big one in the past 2 years. Now it's bringing in the past. And in the mid long run, we believe the main driver of the margin improvement should be the top line growth with the new launches. And we do believe that we have enough assets to grow in the next 5, 10 years.

Then starting from 3 new launches, this is something we do not want to a compromise. And eventually, this will be the growth driver. This will bring -- this will be the main driver of the margin improvements. And then other assets coming in, the elritercept is coming in, the mezagitamab is coming in. And also, we are adding the three exciting oncology assets. So we have to also the increase or invest in R&D. Having said that, we're going to do our best to offset this incremental investment to protect the margin. So we have to now manage this a bit transition period in terms of the LOE we had in the past 2 years and then now in the coming next growth period over the 5 years.

Any other questions? Please.

Yes. Christophe, just a curiosity. You are a leader in the short bowel syndrome market with your teduglutide. I didn't see in your future program any new solution in order to give you the possibility to keep the leadership in a market that is constantly increasing?

Yes, sure, sure. It's a great question, thank you, because it to say that we have a pipeline of product here. So oveporexton is focused on NT1, narcolepsy type 1. We have a TAK-360 which we are developing for NT2 and IH. And we have another molecule for all that type of indication. So we are fully committed to really explore all the possibilities and the possible indications linked to the orexin mechanism.

For different reasons, we don't have one molecule to tackle those. We have multiple molecules, but we are moving at speed, no doubt. So TAK-360 in Phase II, right? And of course, the advantage that we have, we were not the only one is I understand we're very well in the field now because we had our share of success, failure as well in life, that's how you learn. So we think that we will be able to move very fast. And the orexin class has a huge potential. And not only in the sleep space, but potentially in the cognition space, in other areas.

That's what we see right in our Phase III data, we see that we improve, of course, a sleep pattern of this patient with the cognition as well. So potentially, it could be used with many disease where you have a cognition issue, Parkinson's, Alzheimer, and all those. So I mean, this is I don't know, perhaps it will take a decade to explore all the possibilities of orexin field, right?

But then to address because I think you were also asking about SBS or short bowel syndrome medicine. We don't have further development supporting SBS. But what we see with our current product and the competitors that are on the market, this is -- we have still yet to see launch. The competitive asset as well as the generic. And this is an area where the support for the patients because of the complexity of the disease is very important. And that's not easy to do. So despite the competition that has been talked about for a while and the generic, we feel quite confident in our product in GATTEX to be able to continue to support SBS patients.

Thank you so much. It's time to close. Thank you for your presentation and the Q&A session. Thank you so much.

Thank you very much.

[Interpreted] Thank you very much for taking time out of your very busy schedule to join Takeda's FY '25 Q2 earnings announcement. I'm the MC today, Head of IR. My name is O'Reilly. Thank you for this opportunity. [Operator Instructions] Before starting, I'd like to remind everyone that we'll be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause our actual results to differ materially are discussed in our most recent Form 20-F and in our other SEC filings. Please also refer to the important notice on Page 2 of the presentation regarding forward-looking statements on our non-IFRS financial measures, which will also be discussed during this call. Definitions of our non-IFRS measures and reconciliations with the comparable IFRS financial measures are included in the appendix to the presentation.

Now we would like to start with the presentation of the day. We have Christophe Weber, President and CEO; Milano Furuta, Chief Financial Officer; Andy Plump, President, R&D; Teresa Bitetti, President, Global Oncology Business Unit; P.K. Morrow, Head of Oncology Therapeutic Area Unit, will provide you with presentation, which will be followed by a Q&A session. We will get started now.

Thank you, Chris, and thank you, everyone, for joining us today. Our fiscal year 2025 first half results confirm our expected business dynamic for fiscal year 2025 with business fundamentals tracking as planned. This is the last year of very significant VYVANSE generic impact, which peaked in H1 and which will be much less of a headwind to our growth from now on. Growth on launch product grew 5.3% at constant exchange rate, and we expect this growth to accelerate in H2.

ENTYVIO is growing, albeit at a slower pace as the pen is growing 20% quarter-to-quarter in the U.S., but still represent only 9% of ENTYVIO volume in the U.S. Our PDT business is expected to grow at mid-single digit this year with immunoglobulin and albumin growing high single digit. We will continue to maintain very tight OpEx control through efficiency improvement supporting profit.

Our decision to update full year management guidance for core operating profit and core EPS was driven by a headwind from transactional foreign exchange, mostly generated by the euro appreciation, which has most notably affected QDENGA. Our updated reported forecast, including our EPS forecast reflect a nontax deductible impairment loss booked in the first half.

From fiscal year 2026 onwards, Takeda will be in a new business cycle with VYVANSE generic impact mainly behind us, potentially three new product launch for rusfertide, oveporexton and zasocitinib and an evolving late-stage pipeline now enriched by our strategic partnership with Innovent Biologics. Our leadership in leveraging technology and AI will further transform the company, which will be led by Julie.

Milano will discuss our financial results and expected results in more detail in a moment, and then Andy will present our pipeline advancement with exciting data on zasocitinib. Later on this call, Teresa Bitetti and P.K. Morrow will discuss our partnership with Innovent Biologics and we'll focus on two new late-stage molecules. With that, I'll hand it over to Milano to walk us through the financials. Milano?

Thank you, Christophe, and hello, everyone. This is Milano Furuta speaking. Slide 7 summarizes our first half financial results. Overall, our business performance is tracking as we planned. As anticipated, this period was significantly impacted by LOE, as we lost approximately JPY 100 billion of VYVANSE revenue. Meanwhile, we have been focused on driving OpEx savings, which has partially offset the impact to corporate profit. We expect H1 to be the peak of VYVANSE generic impact, and we expect a better growth outlook for the full year.

Revenue in H1 was just over JPY 2.2 trillion, a decrease of 6.9% or minus 3.9% at constant exchange rates or CER. Core operating profit, core OP, was JPY 639.2 billion, a year-on-year decrease of 11.2% at actual FX or 8.8% at CER. Reported operating profit was JPY 253.6 billion, a decline of 27.7% due to larger impairment losses this fiscal year. Core EPS was JPY 279 and reported EPS was JPY 72. The 40% decline in the reported net profit and EPS reflects the impairment of cell therapy, which is nondeductible from taxable income. Cash flow was very strong this period with adjusted free cash flow of JPY 525.4 billion, including improvements in working capital.

Slide 8 shows our growth and launch products, which represent over 50% of revenue. In H1, this portfolio grew 5.3% at CER. This modest growth includes the impact of phasing of certain products, and we anticipate a higher growth rate in the second half. In GI, ENTYVIO growth was 5.1% at CER. We are encouraged to see increasing numbers of active ENTYVIO Pen patients in the U.S., and we are also making progress with expanding formulary access. That said, revenue growth has been slightly below our expectation, and we are revising our full year forecast for ENTYVIO to 6% at CER. In rare disease, TAKHZYRO continues to grow steadily as a market leader in HAE prophylaxis with 5.9% growth at CER.

Our PDT portfolio growth reflects several factors, which were built into our guidance and fully in line with expectation. IG growth was 3.1%. While Medicare Part D redesign is impacting several products in the U.S. this year, one of the most impacted product is GAMMAGARD LIQUID, and we expect this to normalize in Q4. Our SCIG portfolio is growing at double digits, and we expect this to continue. Albumin declined slightly in H1 due to timing of shipments to China and the foreseen cost containment measures. Meanwhile, we have also secured additional sustainable tender markets outside of China, and we expect albumin performance to accelerate in H2. Therefore, we confirm the growth outlook of high single digit for both IG and albumin.

In oncology, FRUZAQLA continues to expand as we roll out global launches. Finally, in vaccines, we have reallocated supply of QDENGA based on market needs, which has pushed some shipments timing into later this fiscal year. However, we expect annual demand to remain in line with our original estimate. Another factor impacting the growth rate of QDENGA is transactional FX, mainly due to the strength of the euro versus the Brazilian real. On Slide 9, you can see how the growth on launch products and the VYVANSE loss of exclusivity contributed to total revenue performance.

FX was also a headwind this quarter due to appreciation of the Japanese yen against major currencies. As we expect growth and launch products to deliver higher growth in H2 and VYVANSE year-on-year decline to moderate, we project more favorable year-on-year growth dynamics in H2. Next, an update on efficiency program that we initiated in April 2024. We continue to make progress with initiatives in H1 this year, including additional organizational changes impacting 600 positions, further optimization of real estate and the growth initiatives to capture efficiencies across the R&D value chain. Restructuring costs in H1 were JPY 27.4 billion, and we are focused on further driving additional OpEx savings.

As we show on Slide 11, these operational efficiencies are contributing to a reduction in R&D and SG&A expenses. In this bridge for core operating profit, you can see that LOE of high-margin VYVANSE was the main reason for the year-on-year decline of 8.8% at CER. Within this decline at CER, we had a negative impact from transactional FX, which accounts for about 1/3 of the decline. Let me take a moment to explain how this is impacting our P&L. Revenue can be impacted when there is an FX fluctuation between the currency paid for product and the currency of the entity where revenue is booked.

This is exactly what is impacting QDENGA sales today, for example, because our European entity books revenue in Europe for its sales to Brazil in Brazilian real. Cost of goods can be impacted, too, when products are imported from other countries. For example, when the euro appreciates, commercial entities outside Europe have to recognize higher COGS when importing products to sell locally. As you know, Takeda has a large manufacturing footprint in Europe, so we are particularly sensitive to euro currency volatility.

Next, reported operating profit on Slide 12. This decreased by 27.7% versus prior year, mainly due to the decline in core operating profit and higher impairment of intangible assets. The main item was a JPY 58.2 billion expense related to our recent decision to discontinue cell therapy efforts. Next, our updated full year outlook on Slide 13. Starting with management guidance, although we have reduced our forecast for ENTYVIO and VYVANSE, we expect total revenue to stay in the range of the broadly flat versus prior year. For profit guidance, we expect higher OpEx savings to fully mitigate the impact from unfavorable change in product mix. However, the transactional FX dynamic that I just described is having a larger impact on profits. Therefore, we are slightly lowering our guidance for core operating profit and core EPS from broadly flat to low single-digit percentage decline.

The bottom part of the slide shows our reported and core forecast. This reflects our latest FX assumptions, including transactional FX and items booked in H1 that will impact the full year results. We have also revised our adjusted free cash flow forecast to include a USD 1.2 billion payment to Innovent Biologics for our recently announced in-licensing deal. This payment will be funded by cash on hand. Our dividend outlook remains JPY 200 per share for the full year.

On Slide 14, we show more details about the updated operating profit forecast. You can see the relative magnitude of transactional FX impact, while OpEx savings compensate for unfavorable product mix. The net impact of all these moving parts, including transactional FX, is a JPY 10 billion reduction in our operating profit forecast to JPY 1.13 trillion. In summary, our business fundamentals are tracking as planned. While H1 growth was largely impacted by LOE, we expect better growth rates for the full year fiscal year. Meanwhile, we remain focused on cost discipline to deliver our guidance, while investing for future growth.

Thank you for your attention. I will now hand over to Andy for more details on the pipeline updates.

Thank you very much, Milano, and hello to everyone on today's call. Next slide, please. Fiscal year 2025, as you just heard from Christophe, is a pivotal year as we advance and accelerate our exciting high-value late-stage pipeline to launch. Today, I am pleased to provide pipeline updates reflecting our growing late-stage portfolio of promising programs powered by our increasingly productive and efficient development engine. We are 2 for 2 with positive Phase III studies for both rusfertide and oveporexton with zasocitinib Phase III data in psoriasis expected by the end of this calendar year.

In a few minutes, Teresa Bitetti and P.K. Morrow will walk you through the details of our recently announced partnership with Innovent Biologics, which upon closing, will expand our oncology pipeline. With 2 highly differentiated late-stage oncology assets in development for multiple solid tumors, this deal has the potential to transform our oncology pipeline. But first, I'm going to highlight some recently presented Phase III data for oveporexton and long-term IgA nephropathy data for mezagitamab that we are particularly excited about.

The results of these studies truly represent Takeda's high bar for innovation and the breakthrough benefits we seek to provide patients. Let's start with oveporexton on the next slide. Oveporexton is on track to be the first-in-class and potentially best-in-class orexin 2 receptor agonist that treats the underlying orexin deficiency in patients with narcolepsy type 1. We believe that the data presented at the World Sleep Congress last month establishes a new standard of care for NT1.

In one of the largest, most comprehensive Phase III development programs for NT1 to date, we demonstrated statistically significant and clinically meaningful improvement across all 14 primary and secondary endpoints with most participants within normative ranges. It is clear that oveporexton has a profound effect on daytime symptoms like excessive daytime sleepiness and cataplexy, nighttime symptoms and cognitive symptoms.

In addition, it significantly impacts how patients with NT1 feel and function. We believe we have created a new standard of care to treat NT1 by treating the entire range of symptoms with a safe, well-tolerated pill. Oveporexton sets a high bar with the new standard of care, which will be hard to beat. Feel and function were assessed using multiple objective and subjective measures. Based on these strong Phase III data, we plan to file for U.S. approval in NT1 as quickly as possible later this year with regional filings to occur simultaneously or shortly thereafter.

Our orexin franchise is making rapid progress beyond oveporexton. The next-generation orexin 2 receptor agonist, TAK-360, is rapidly enrolling Phase II studies for narcolepsy type 2 and idiopathic hypersomnia. Results for these trials are expected to be read out by early fiscal year 2026. Next slide, please. We previously presented compelling 48-week proof-of-concept data for our anti-CD38 antibody, mezagitamab, in IgA nephropathy. This includes consistent and supportive trends in decreased IgA, IgG and galactose-deficient IgA1 levels, reflecting the selective targeting of CD38 on plasma cells, which produce pathological antibodies.

I'll now preview the exceptional 96-week results from the proof-of-concept trial that continue to support this promising approach to modifying this disease. Mezagitamab-treated patients show persistent reductions in proteinuria or UPCR, nearly 18 months after the last dose, suggesting sustained efficacy beyond the treatment period. Importantly, the estimated glomerular filtration rate, or eGFR, that is the regulatory gold standard for measuring renal function remains stable at 96 weeks.

Mezagitamab is the first IgA nephropathy therapy to demonstrate stable renal function 18 months after dosing. We look forward to presenting the full data at ASN Kidney Week next month. Our Phase III IgA nephropathy study is open and has been enrolling well. Next slide, please. The Phase III VERIFY study of rusfertide, a potential first-in-class synthetic hepcidin mimetic in development to treat polycythemia vera was presented at the American Society of Clinical Oncology in a plenary session in June. Updated 52-week data will be available at an upcoming medical congress.

This quarter, we received breakthrough therapy designation, which speaks to the exceptional practice-changing data presented at ASCO 2025 and increases the probability of priority review for rusfertide, which we intend to file this fiscal year. Looking ahead to our next major pipeline milestone, we expect zasocitinib Phase III psoriasis data later this calendar year. Based on the data seen in Phase II, we believe zasocitinib will provide an important and very attractive oral option for patients. I'm also excited to report that the head-to-head study of zasocitinib versus deucravacitinib in psoriasis is expected to complete enrollment in the next few weeks.

As you can see here, psoriasis is the first of many diseases where zasocitinib can benefit patients. With that, I will now turn it over to Teresa and P.K. to provide more details on the Innovent partnership, which has the potential to catapult Takeda into an industry-leading oncology company. Thank you.

Thank you, Andy. Good morning, good afternoon, and good evening. We are pleased to be here today to share more detail about our recently announced partnership with Innovent Biologics and why it's critically important for patients and for Takeda. Next slide. Our collaboration with Innovent involves 3 differentiated assets, each with unique mechanisms. 363 is a potentially first-in-class PD-1/IL-2 alpha bias bispecific. 343 is a next-generation Claudin 18.2 ADC, and we're also receiving the exclusive option to license 3001, which is another ADC targeting EGFR and B7H3.

This deal is strategically important because it adds cutting-edge anchor assets to our pipeline. First, a bispecific with the potential to be an IO backbone therapy across a broad range of indications, lung included. Second, a next-generation ADC with potential to address difficult-to-treat cancers, including gastric and pancreatic. And finally, an option to license a potential best-in-class bispecific ADC. These unique programs, each with differentiated mechanisms further demonstrate our commitment to science, our commitment to patients and have the potential to be significant growth drivers for the Takeda enterprise post 2030.

So next slide. Let me spend a little time sharing how we've structured this deal and what it brings to the Takeda portfolio. So for 363, which is the PD-1/IL-2 alpha bias bispecific, Takeda will lead the co-development of this asset globally using a 60-40 Takeda-Innovent cost split. Takeda will also lead U.S. co-commercialization of 363 with a 60-40 Takeda-Innovent profit or loss split. And Takeda will have the exclusive right to commercialize and manufacture outside of Greater China.

For 343, the Claudin 18.2 ADC, Takeda will have the right to develop, manufacture and commercialize worldwide outside of Greater China. And finally, we will have the option for 3001, which is the EGFR/B7H3 ADC currently in Phase I. If we choose to exercise the option, we will have global rights to develop, manufacture and commercialize outside of Greater China.

Next slide. This collaboration further enhances and augments our oncology portfolio and is consistent with our clearly articulated oncology strategy. As a reminder, you can see here on this slide, our strategy is focused on 3 disease areas and 3 modalities. And as we have highlighted here in the red box, the programs included in this partnership fits squarely within our strategy. So now I'm going to turn it over to P.K. to explain more about the science behind these programs.

Thank you, Teresa. I'm now going to share more about the 3 programs in this collaboration and why we are so excited to bring them into our pipeline at Takeda. I will start with IBI363. IBI363, as you can see here, is a bispecific with a unique mechanism that has the potential to become an immuno-oncology or IO backbone. Specifically, IBI363 is what I would call an IO-IO molecule, meaning that it is designed to block the PD-1/PD-L1 pathway and selectively activate IL-2 alpha signaling while attenuating IL-2 beta gamma signaling.

As you can see on the left-hand side of this slide, this differentiated IL-2 alpha biased approach has been shown to activate tumor-specific T cells that express both PD-1 and IL-2 alpha receptor within the tumor microenvironment, thereby unleashing a more effective antitumor immune response. IBI363, thereby supercharges tumor-specific T cells, resulting in apoptosis of the cancer cell. And by blocking the PD-1 pathway, IBI363 ensures that these T cells continue to stay activated and it reduces the risk of T cell exhaustion. IBI363 has now dosed more than 1,200 patients and has demonstrated very encouraging results.

Next slide. We have seen clinically impactful results in trials involving patients with IO refractory squamous and non-squamous non-small cell lung cancer as well as in third-line microsatellite-stable colorectal cancer. And while median overall survival is immature at the higher doses, it already shows a positive trend even at these lower doses. The results you see on the screen were just shared as oral presentations at this year's ASCO. They are encouraging data, especially when indirectly compared to results from standard of care chemotherapy on the right.

The safety profile of IBI363 is considered tolerable with the most common adverse events related to IBI363 being rash and arthralgia. Discontinuations due to these events have occurred in a small percentage of patients and a priming dose has been added to the dosing schedule to reduce the risk of immune-related events that may occur with bispecific dosing. The high caliber of these data is reinforced by the FDA's granting of a Fast Track designation in non-small cell lung cancer. Thus, while this is a competitive environment, we are very encouraged by the data we have seen to date and the potential of this differentiated mechanism.

Next slide. To maximize the potential of IBI363, we have 3 very clear objectives, which are built on the efficacy that we've seen thus far. First is to establish foundational efficacy in tumors that have progressed as IO therapies. Second is to penetrate into earlier lines as either monotherapy or in combination. And third is to build on our known data to establish efficacy in immune desert tumors such as microsatellite-stable colorectal cancer in which other IO therapies have not worked. So that's why, as shown on this slide, we're initially establishing the 5 Phase III trials, including 2 trials in IO refractory squamous and non-squamous non-small cell lung cancer, 2 in frontline non-small cell lung cancer and 1 in microsatellite-stable colorectal cancer.

We also have a series of life cycle management trials that we're discussing with Innovent, which will help to build upon proof-of-concept data as it evolves. Next slide. Now I'll walk you through IBI343. This Claudin 18.2 targeted ADC is seamlessly harmonized with our oncology strategy due to, first, its novel ADC platform; and second, its demonstrated efficacy in GI cancers. When examining the image on the left, I will walk you through the platform from left to right. First, on the very left, IBI343 has a humanized IgG1 with Fc silencing. This Fc silencing is important because it reduces the risk of off-target toxicity and increases the tolerability of this Claudin targeting molecule.

This differentiates 343 from other Claudin-targeting agents, which are known to have increased gastrointestinal adverse events. In addition to that, in the middle, the glycan-specific conjugation and sulfamide spacer increases the stability, solubility and potential bystander effect, allowing the ADC to result in a more efficient apoptosis of the cancer cell. And it also supports a homogeneous drug-to-antibody ratio of approximately 4, which many of us believe is a favorable ratio for ADCs. And finally, this potent exatecan payload inhibits topoisomerase 1, so it fits seamlessly into many standard of care regimens. Next slide. 343 has been dosed in more than 340 patients. And as shown during oral presentations at this year's ASCO, IBI343 has demonstrated encouraging activity in pancreatic and gastric cancers. Compared to the standard of care, 343 has more than doubled the response rate and more than doubled the overall survival as compared to standard of care chemotherapy thus far. This, coupled with a favorable and consistent safety profile with manageable GI and hematologic adverse events supports its ability to fit seamlessly into the standard of care.

All of this makes us very excited to continue advancing this asset in GI cancers with critical unmet need. And as with 363, these results were also reinforced by a Fast Track designation by the FDA for pancreatic ductal adenocarcinoma. Next slide. We also have an ambitious development plan for 343 in Claudin 18.2 expressing GI cancers as its topoisomerase inhibition enables us to fit seamlessly into the frontline treatment of pancreatic cancer. In the second line of the chart, you can see that Innovent has an ongoing study, which is well underway in China and Japan in the third-line setting in gastric cancer. We will leverage this data from this study and add a single-arm study in the U.S. and the EU to move forward towards global registration in the third-line setting. And in the bottom row, you can see that the plans are underway for a frontline study in gastric cancer to address the needs of more gastric cancer patients across lines of therapy.

Next slide. And finally, I will review with you IBI3001, for which we have the exclusive option to license at a potential future date. IBI3001 is truly a novel molecule, which is both a bispecific and an ADC. It targets EGFR and B7H3, 2 targets that are highly expressed in many solid tumors, including lung cancer, colorectal cancer and head and neck cancer, and it is linked to the same potent exatecan payload as 343. Innovent has rapidly progressed this asset into the clinic, already producing data, as you can see on the right-hand side, that shows encouraging efficacy even in highly refractory solid tumors.

We look forward to following the progress of this trial, which is moving at speed. And with that, I'm delighted to turn it back to Teresa to talk about the immense promise of this collaboration for patients.

Thank you, P.K. So looking at this from a patient perspective against the backdrop of the top tumor types by overall prevalence worldwide, we have the opportunity to make a difference in areas of extremely high unmet need. So as you can see highlighted in red, the tumors in our initial development plan are not only prevalent but difficult to treat. In our initial plans, we can address 4 of these cancers and make a meaningful difference for patients.

Next slide. As I mentioned at the start, this partnership will serve as a significant potential growth driver for Takeda. When we look at the market opportunity for our initial development plans for 363, we're looking at lung and CRC. In lung, we will be focusing on the IO refractory second-line setting, where the majority of patients will have already been treated with a PD-1 or PD-L1 and then move rapidly into the frontline setting as a monotherapy or part of a combination regimen. And in colorectal cancer, we'll focus on the frontline patients with MSS CRC. So in aggregate, the initial plan focuses on a potential combined addressable market of over $40 billion.

Next slide. Now let's look at the market potential for 343. Globally, gastric cancer affects around 1 million people with 35% to 55% expressing the Claudin 18 biomarker. In pancreatic, the global incidence is approximately 500,000 with 30% to 60% of patients expressing Claudin 18. The current standard of care in these tumor types centers on chemotherapy and the 5-year survival rates are very low, highlighting the urgent need for innovative treatments. Altogether, 343 offers a potential combined addressable market of approximately $8 billion, although we expect this market to grow as we and other novel agents enter. So as you can see, across both assets, there's an enormous potential to make a significant impact for patients.

So next slide. So in closing, we are incredibly energized by this extraordinary strategic partnership that brings great value for both patients and for Takeda. This agreement with Innovent will enable us to address critical treatment gaps in some of the most prevalent and difficult-to-treat cancers. It brings forward unique and truly differentiated programs that will overcome many of the challenges of currently available therapies, and it adds anchor assets to our solid tumor pipeline with the potential to be future growth drivers for Takeda.

So in short, this collaboration is incredibly meaningful, both for us and for patients. So thank you for your attention. I'm going to hand back to Chris to open the Q&A.

[Interpreted] Now I would like to take questions from participants. We have Christophe, Milano, Andy, Teresa, P.K. and Julie Kim, CEO Elect Interim Head, Global Portfolio Division and Giles Platford President, Plasma-Derived Therapies Business Unit are joining in the Q&A. [Operator Instructions] The first question is from Yamaguchi-san.

This is Yamaguchi from Citi. The first question regarding to Innovent deal. I understand the potential of this product is pretty big. But at the same time, Takeda sales has not really involved in the solid tumor for a while after [indiscernible]. And investors have a lot of question on this one, how much you need to spend on R&D for the next few years where you have to balance the operating margin.

So R&D investment, even though you're going to split, but solid tumor first line seems to be very costly. So can you give me some elaboration on how you're going to run this clinical trial to compete with the global guys on the R&D and trying to, I would say, finance your R&D and the impact -- potential impact to the margins? That's the first question.

The second question regarding to the earnings change. Even though there's only a slight change on a CL basis on the ENTYVIO and VYVANSE, seem to have a big change on the currency things. And this year might be a unique year, but is there any way in the future trying to avoid those changes or through some other transactions trying to prevent or this year, it's hard to escape from this currency related to earnings divisions. That's the second question.

Thank you, Yamaguchi-san. So the first question was around how we're going to run the trials for the Innovent assets and what that means for R&D expenses. So perhaps P.K. can just comment briefly on -- again, on the development plans we have in place for these programs. And then Milano can add a comment on how that will fit within our R&D budget. And then for the second question on this transactional FX impact, I'd also like to ask Milano to comment on that, please.

Yes. Thank you. So we are very committed to investment both within our oncology portfolio as well as overall in order to support our long-term growth, while continuing to support profitability. In terms of the financial implications of this deal, these have actually been reflected in our revised forecast and guidance. It's a little premature for us right now to comment on outlook for R&D spend and margins for fiscal year 2026. But I can assure you, we are very committed to achieving the margins in the mid- to long-term, which are driven by top line growth and optimizing our cost structure.

Thank you, P.K. Yamaguchi-san, not much things to add to what P.K. said already. But I think you can see that we have been managing quite effectively or in some areas, we are even reducing R&D expenses beyond our initial expectations by the efficiency program, also the continuous -- with continuous cost discipline. That's one.

And then the second one is we are very mindful about this -- the incremental R&D investment as well. So that's why you see this cost split of the 60-40 for this 363 compound. At the same time, as you might be aware that we have been arranging some cost sharing program, the partnership with Blackstone for mezagitamab. So that's kind of through those kind of arrangements. We are very consciously managing incremental investment.

But in the end, we want to invest for growth, while optimizing OpEx. Eventually, that's going to be top line growth, should be the main driver to the long-term corporate margin improvement. Second question about transactional FX. This is very hard to answer, as it is very difficult to predict the currency fluctuation. But this transactional FX in Takeda's case, as I commented during the presentation, the euro volatility is quite -- have a big impact in this year. This is because of -- relatively, we have a large footprint in the manufacturing operation in Europe.

So we have to see how currencies goes. But in the long -- if we want to mitigate, then we have to -- maybe in the long run, somehow we have to rebalance the manufacturing footprint, but that's kind of, of course, a long-term strategic plan. It's not -- we've taken actions depending on a 1-year currency volatility. We have to take a bit to long-term stance on that.

[Interpreted] Next question from Mr. Matsubara from Nomura.

[Interpreted] Matsubara from Nomura. I have 2 questions. First is about ENTYVIO. As you explained, ENTYVIO Pen penetration is advancing, but the insurance coverage as of now and to enhance penetration of pen furthermore, what actions are you taking now? The second question is Nabla Bio that you have partnership with now, and this is nonclinical as of now, and it's not fully disclosed, but by utilizing this R&D acceleration, how does it go? And for mid- to long-term pipeline enhancement and acceleration, how do you see that?

Okay. So thank you for your questions, Matsubara-san. So the first on ENTYVIO, what is the state of insurance coverage? What are we doing to expand access to pen? I'd like to ask Julie to comment on that. And then the second question was on our recently announced collaboration with Nabla Bio. Perhaps Andy can add some comments on what we're doing in terms of utilizing AI in drug discovery. Julie?

Yes. Thank you for the question. And in regards to ENTYVIO Pen access, as you heard from Christophe in his opening comments, we are continuing to improve our overall position along the access continuum, and we're encouraged by the 20% growth that we're seeing quarter-over-quarter in terms of ENTYVIO Pen. Now that being said, we continue to work on access at various different levels. One, in terms of the -- I would say, the highest level of coverage. I think you are all aware that we have 2 out of the 3 big contracts signed for quite some time now, and we continue to work on the CVS piece.

For the other levels of access, when you look at the way that the U.S. market is structured, it's actually -- there's a lot of localization even with the way that we have the big 3 PBMs. So while we continue to improve at the local level as well, we are putting in place very specific tactical actions to address the localized challenges in addition to what we're doing at the overall coverage level. So hopefully, that gives you a sense that we're working across multiple different levels on the access continuum in the U.S.

And thank you, Julie, Matsubara-san, and thanks for the question. We're quite excited by the partnership with Nabla Biosciences. But maybe I can just dial up for a second and give you some sense of the work that we've been managing in our research laboratories for the last couple of years. We see discovery in the biopharmaceutical industry changing quite rapidly, and we're positioning Takeda to be at the leading edge of application of advanced technologies in research.

And in fact, we're in the process of completing a new laboratory in Cambridge, Massachusetts in Kendall Square that we call the lab of the future. And the intent of this lab is to enable a workflow in discovery that can both improve our probabilities of success and also greatly accelerate the time that it takes to move molecules through discovery. Today, 1 in 5 -- 1 in 4 of our research programs are enabled by in silico technology. By next year, we expect that over 90% of our programs will be enabled by in silico technology.

The partnership with Nabla Biosciences is one example of how we're embracing AI in drug discovery. This is a company that was started by George Church that uses algorithms to optimize sequences of large molecules. We've worked with them for over 2 years now, and we have 3 pilot experiments that each were successful, 2 accelerated programs and a third one actually took us to a novel space that we wouldn't have gotten to with traditional approaches. So we were quite excited about that, and that's what led to then the collaboration that you see at hand.

[Interpreted] JPMorgan, Wakao-san.

This is Wakao from JPMorgan. I have 2 questions. Firstly, regarding gross margin trend and revised guidance. When comparing the initial guidance with the revised full year guidance, the gross margin has deteriorated 66% to 64.7%. Should we understand this is -- this primarily as an FX impact from the euro? If there are other contributing factors, could you elaborate on this point?

And also, if FX is indeed affecting the gross margin, the second quarter gross margin looks relatively solid compared to the FX levels. I'd like to know this point? And why do you expect it to deteriorate in the second half? And second question about IV -- Innovent partnerships. When is the next data update for IBI363 expected, so Page 27. Regarding ongoing first-line and second-line NSCLC studies, we will be able to see data in 2026. In addition, when is the global Phase III trial expected to start? That's it.

Thank you, Wakao-san. So the first question on gross margin trend and the revised gross margin outlook for the full fiscal year. I'd like to ask Milano to comment on that. And the second question on the next data point to come for IBI363 and whether we can give an indication of starting Phase III studies. I'd like to ask P.K. to comment on that, please.

Wakao-san, thank you for the question. You asked about the bridge from initial forecast updated forecast. At the same time, how the H2 second half gross margin will be lower. Actually, the answer would be basically same. If you compare -- if we compare the May forecast and revised the forecast, as you said, gross margin is expected to be lower by about 1.4 percentage points. About half is coming from the transactional FX. And the other half is also coming from kind of product mix change.

So we are reducing the VYVANSE, the revenue and the ENTYVIO revenue. And then these 2 revision has a negative impact on the gross margin. So that's the contributing this gross margin update in the forecast. And actually, this explains -- these dynamics explains in the second half because this is more about the second half sales. Also, we are updating the currency forecast for H2. So those 2 impacts were contributing lower gross margin in H2.

Thank you, Milano. And perhaps to address the other 2 questions that were asked related to the Innovent collaboration. The first is to say that we, like you, are very enthusiastically monitoring the data with both 363 and 343. We are not yet releasing when we will disclose further data in the coming year, but we will be following this closely, as we determine when the appropriate data inflection will be in order to release more data in a public forum.

The second question you had was related to the start of the Phase III studies. And we have noted that the Phase III study in second-line squamous non-small cell lung cancer, we expect to begin in the coming months. And as you saw from the slides, we will also be looking towards moving and initiating additional studies at speed.

[Interpreted] Next question is Stephen Barker, Jefferies.

Steve Barker from Jefferies. The first question is about ENTYVIO and the second question is about your collaboration with Innovent. Starting with ENTYVIO. So you've cut your estimated current growth rate at constant exchange rates from 9% to 6% due to competitive pressures. I was wondering if you could give us more details of those competitive pressures and the implications for growth going forward as in next year and beyond?

And secondly, regarding your deal with Innovent, certainly, the China data published to date on 363 is impressive. But there have been several cases where impressive data in China has not been replicated in international studies. So I was wondering if you could share your view on if that apparent trend or phenomenon is real or not? And more specifically, how confident are you that you can replicate the impressive China data in international trials?

Thank you, Steve. So I think the first question on ENTYVIO and the reasons for the reduction in the full year forecast. I'd like to call on Julie to answer that. And the second question on data replicability of the China studies in a more global population. I'd like to ask P.K. to comment on that, please.

Thanks for the question, Stephen, on ENTYVIO. So let me start by saying that ENTYVIO has been on the market for 12 years now, and it is still the overall market share leader in IBD when you look at it from a patient demand perspective, and we are holding market share. But as you've noted, there are a few things that are impacting our top line. One is in terms of the intensified competitive activity, and we're seeing that particularly on the CD side, but it is also starting to impact UC.

But as I said, overall, because ENTYVIO is still the only gut-selective medicine out there for IBD, we've been able to hold share. The other things that are impacting the top line, there are a few things. One, as Milano mentioned in his talks, it is about the channel mix. We've particularly had an increase in 340B population as well as an increase in Medicare Part D redesign impact. Beyond that, the pen conversion, as we've mentioned, is moving a bit slower than we anticipated. And while we are resolving those access hurdles, it has impacted the top line thus far. But we do expect as those hurdles are resolved, we will see an acceleration of growth, which is why we do expect to end the year higher than where we are year-to-date.

Thank you, Julie. And to answer the second question, I'll say 2 points. One is, as you alluded to, initially, Innovent has accrued more patients in China, but over the past few months has now begun to increase the enrollment ex-China, including in U.S. and Australia, and we are continuing to monitor that data as well as its applicability.

The second element is the fact that we actually endeavored on very significant due diligence during the evaluation for this collaboration. And that included bringing our own Takeda radiologists in order to evaluate the -- many of the images that we were seeing of the patients as well as determining the correlation with our response criteria, i.e., RECIST. And we saw a very strong correlation there.

[Interpreted] Next question, SMBC Nikko Securities, Wada-san.

Wada from SMBC Nikko Securities. About Innovent pipeline, I have a question. 363, regarding mechanism of action, I want to know IL-2 alpha bias, what's the significance of this? Roche has -- well, IL-2 itself is approved for the melanoma and other cancers, but not expanded very much to other cancers. If you activate alpha, Treg may be activated as well. And because of that immune response is suppressed, I think that's what was the rationale. So alpha activated mechanism for 363, what's the meaning of that, including the clinical data you have obtained so far. Can you explain that, please?

Yes, P.K., would you like to take that question?

Yes, absolutely. So it's a great question. And we also asked the same question and interrogated that data with Innovent and discussed this in depth. And I can tell you that what is actually unique about this particular pathway is the fact that, first, we did learn from the experiences of others within the industry as it relates to IL-2. And that's why our focus has been on this IL-2 alpha bias with attenuation of the beta-gamma pathway. And with that in mind, we have seen that the IL-2 alpha biased approach has been able to target specifically tumor-specific T cells that are addressing both -- or express both PD-1 and IL-2 alpha.

So it's been a very precise and effective activation within the tumor microenvironment. The other question that you had was related to whether this would actually cause and trigger activation of Tregs, which we also had that question related to. And we have not actually seen activation of Treg cells, which would have resulted, of course, in a decrease in the immune response. Thirdly, I would say that because of this, we think that the clinical data are very consistent with the mechanism of action with findings of very encouraging data in both IO refractory as well as in earlier lines. Thank you.

[Interpreted] May I continue?

[Interpreted] Yes, go ahead.

[Interpreted] And for development policy, so refractory cold tumor is the strategy that you want to take. I understand that additional IL-2 NSCLC first line and head-to-head with PD-1 for Phase III. Is that the plan going forward?

Yes. Chris, would you like to be to take this?

Yes, please P.K.

Yes, of course. So I think your question was around the development plan related to IBI363 and where we see the experience with this and the promise of this and agree with you that we actually want to leverage the strong clinical data. So beyond the 2 second-line studies in IO refractory squamous and non-squamous non-small cell lung cancer, we will plan to go head-to-head against IO therapy, both likely in an all-comers population as well as in a TPS-high population.

Next question, I'd like to call upon Tony Ren from Macquarie.

Tony Ren from Macquarie. A couple of questions again on the Innovent transaction. For the IL-2 PD-1 bispecific IBI363, I understand -- I actually cover Innovent myself. I understand they have a global Phase II study. The primary completion -- estimated primary completion of this study is March 2026. So really only 4 months away. Did you guys get a chance to look at the data from that Phase II study, which I believe primarily is conducted in the U.S. and looking to recruit about 178 patients? And if so, were the data better or worse than what you've seen in China? So that's my first question.

P.K., would you like to answer that one as well, please?

Yes, absolutely. So yes, first, I would like to say that, yes, we have been in constant communication with Innovent related to the evolving data. And as you allude to, that data in the global Phase II is progressing or the trial itself is progressing very nicely and at speed. I can't disclose what obviously, the data shows thus far, but we can see that I would like to just say that the data thus far is fairly encouraging, but I think too early to comment further.

Okay. Thank you for addressing that. Also, Innovent is starting the Phase III global study. I think it's called MarsLight-11 trial in immunotherapy-resistant non-squamous non-small cell lung cancer, right? So that trial according to clinicaltrial.gov is literally starting today. But also -- Dr. Morrow, you said that you're looking to start in the next few months. So are you -- as Takeda is leading the clinical development, right, are you looking to change the trial design and the conduct of this MarsLight-11 study?

What I will say is that we -- as I noted, we have had great conversations and discussions with Innovent weekly, if not every few days. And related to the MarsLight study as well as these beginning studies, we've also had discussions about whether we would need -- we would desire to change or tweak any of the elements of the protocol itself. I would say right now, we have not required any or asked for any significant changes as of today, but we are continuing to have those discussions.

If you do decide to change the trial design or protocol or conduct, would that require a new FDA clearance?

I don't think so.

[Interpreted] Next question is Ms. Ueda, Goldman Sachs.

I am Ueda, Goldman Sachs. My first question is regarding [indiscernible] therapy business. I think in the United States, now CSL has been closing some of its plasma centers recently. So it also appears that Takeda is currently focusing on moving -- improving efficiency such as optimizing utilization rates and implementing the digital transformation initiatives rather than expanding the number of centers.

So are there any changes in the business environment in the U.S. such as like the demand outlook or the cost structure that are driving the shift? And furthermore, I think some other companies seems to be actively investing in the collection centers outside in the U.S. So could you also let us know whether you are also considering similar types of investments?

[Interpreted] I'd like to ask a second question to Milano regarding your dividend increase. Given this -- the downward revision of the guidance, I believe that EPS is going to be also lowered. And you also are able to transfer from the accumulated fund to your hand. However, what is about the potential risk of the impairment loss and how you are confident to continue increasing the dividend payment? I'd like to ask the second question to Milano-san.

So the first on the PDT business and specifically on our collection initiatives in the U.S., I think I'd like to ask Giles to comment on that. And then the second question on the sustainability of the dividend. Milano, if you could kindly answer on that one, please.

Yes. Thank you, Chris, and thank you, Ueda-san, for the question. We have been investing extensively to improve efficiency and productivity across our BioLife collections network, and that has positioned us very strongly to be able to meet the growing demand for plasma-derived therapies and to continue to grow our collection volumes without opening to the same extent, new centers.

In particular, we have benefited this year from the accelerated rollout of the personalized nomogram for both our FK and Haemonetics devices, and that has enabled us to improve volume collection by approximately 10% to 11% on a per donation basis.

And as a result, we won't be opening as many new centers, and we are also benefiting from the ramp-up of the centers that we have opened in the past years. To the second part of your question, we do continuously evaluate opportunities to open up new countries to contribute to global supply of plasma. We don't have anything to communicate at this point in time, but it is a big part of our advocacy work worldwide to ensure that we are having more countries contributing to sustainable supply of plasma. Thank you.

[Interpreted] Thank you very much for your question. Basically, regarding our dividend policy, as we explained in the past, it is a progressive policy, meaning we will sustain or increase the dividend. And in order for us to make a decision, we will look at core EPS and reported EPS and mid- and long-term reduction of interest-bearing liabilities or borrowings. And looking at these 3 parameters, we make a proposal what to do with the dividend in the next year and going forward.

Therefore, at this point in time, I cannot say anything definitely, but these are the 3 points, we will base our decisions. And for the next fiscal year, around May time frame, we would like to announce what is the policy of dividend.

[Interpreted] Next question from UBS Sakai-san.

Fumiyoshi Sakai from UBS, two questions. One is the same plasma business. CSL issued profit warning. There are reasons very vague, but one of the factors that you mentioned is weakening demand of China albumin sales or revenues. And your page -- Slide 40, you have slight decline in China. However, you haven't really changed the guidance for FY '25. Do you think -- do you still think that this guidance is achievable? If it's so, can you just give us the -- what's really going on in China market right now? So that's the first question.

The second question is U.S. Biosecure Act when you make a deal with Innovent, anything going on in the U.S. these days is a mystery, but this act is still pending? And have you considered what are the political consequences having China Biotech as a partner? Probably not? But if you could update with this Biosecure Act and your business tie-up, I would really appreciate that. That's the second question.

Thank you, Sakai-san. So the first question on albumin demand in China and our confidence in the full year outlook, I'd like to ask Giles to comment on that. And then the second question on U.S. US Biosecure vis-a-vis the Innovent deal. I'd like to ask Christophe to answer that question, please.

Sure, Chris, and thank you, Sakai-san, for your question. It's true, our albumin portfolio did decline marginally by 2% for the first half. This was a result of the impact of shipment phasing to China, but also related to the continued government-imposed cost controls in the country, both of which were anticipated as well as some effect of tender timing globally. And I'd like to point out that with a somewhat slower near-term growth outlook for China linked to those government-imposed cost controls, we have been actively working to build sustainable market opportunities for albumin outside of China, and we do see continued growing demand for albumin worldwide.

And we have successfully secured a number of tenders in markets ex-China, which will be delivered in the second half, hence, accelerating our growth for the balance of the year. So yes, we remain confident to deliver on our guidance of high single-digit growth for the year for albumin and for our IG portfolio. Thank you.

Thank you, Sakai-san. This is Christophe here. Obviously, we take into consideration the geopolitical environment when we discuss a deal like our partnership with Innovent Biologics. So I will mention 2 points. One is that we will do -- we'll drive the global development of this asset, guaranteeing that it is meeting all the criteria required by regulatory agencies across the world. So that's very important. And the second point I will mention is that we will manufacture these molecules in the U.S. So we will do a full tech transfer and we manufacture -- we'll organize the manufacturing of this molecule in the U.S. And therefore, we think that this is also a way to mitigate the potential geopolitical risk. Thank you.

[Interpreted] Can you just -- Giles-san, can you give a margin update in PDT business?

Yes, absolutely. I can do that. So we continue to see our margin recovery year after year, and we expect to deliver continued margin improvement in fiscal '25. And that's part of the reason why we gave a slightly more modest guidance in terms of growth for this year. We are seeing more supply on the market. If you remember, Takeda was the first to recover post pandemic. So we benefited from strong growth the past couple of years in meeting unmet demand globally.

We see that situation now normalizing. So we're being a little more selective in terms of tender participation ex-U.S., very much expected, anticipated and consistent with the guidance that we gave, and that's partly because we're trying to calibrate both the need to grow, but also the need to grow profitably and to ensure we're getting value recognition in the process. We see continued improvement in product mix. So our innovative subcutaneous IG portfolio has delivered 15% growth for the first half.

So that product mix helps in improving margins. The BioLife productivity and efficiency efforts driven by data digital and technology transformation that I referenced earlier are also helping us to improve margin. And we have seen gradual improvement in yield in fractionation and process improvement across our manufacturing network. So all of that is contributing to an improvement in margin over time. Thank you, Sakai-san.

For the next question, I'd like to call on Mike Nedelcovych from TD Cowen.

I have 2. My first is just a broad question on your celiac disease programs. I'm just curious what the breadth of your ambitions are here? How important could those programs become ultimately should they make it to the marketplace? And then my second question is on mezagitamab for IgAN. When we think about the target product profile for that agent, is it sufficient to have efficacy similar to competitor agents across mechanisms, but with potential treatment holidays? Or should we be looking for better efficacy?

Thank you, Mike. I think both of those questions on our celiac ambitions and aspirations for mezagitamab, Andy you can answer those.

Thanks, Chris. Mike, it's Andy. So firstly, on the celiac programs, we had 3 programs that were in proof-of-concept studies, one that we've discontinued, which was TAK-062, which was an orally administered glutinase, which failed to show benefits. And two, TAK-227, which is a transglutaminase 2 inhibitor that's got restricted and then TAK-101, which is a tolerizing vaccine. Both of those are still in Phase II studies right now. Of course, this is a huge unmet medical need with no established standards of care. The bar is quite high for moving forward and the science is quite tough. But we're excited to see data in the coming months and over the next year for both of those programs. So I think we can talk more about what the potential long term could look like after we've seen those data.

In terms of mezagitamab, obviously, and you're referencing this, it's an incredibly competitive landscape. With mezagitamab, though, we've got a fairly unique opportunity here. I would say that in terms of efficacy, we wouldn't -- based on the data that we've seen, especially from the APO/BAF agents, I don't think that we expect to see more efficacy. I think the real opportunity with mezagitamab is at least similar efficacy. The 96-week data that I referenced that you'll see in the coming weeks at the upcoming ASN Week meeting is quite extraordinary. I think the real opportunity here is the potential for sustained benefit after relatively short-term dosing. And then secondly, the potential benefits on safety.

[Interpreted] In interest of time, I would like to make the next question as final, Sogi-san, Bernstein.

I have 2 questions. First question is about ENTYVIO. So this is to Julie. So you have mentioned that the evolving competition in the U.S. as well as the increasing -- the change in channel mix. I can imagine that those -- the dynamics are -- it's not really easily reversible. So should we assume that the slowing down the growth rate as you have included in the revision from 9% to 6%. Is this the kind of trend we should expect for the 2026 and beyond? And if that's the case, will you be revisiting the peak year sale of ENTYVIO at some point? That's first question.

The second question is about the Innovent deal. I have a question about this IBI3001, very interesting product, the ADC -- bispecific ADC. For this molecule, should we think that this is kind of going to work as 2 ADCs in 1 molecule, meaning that it's just kind of working as EGFR ADC and the B7H3 ADC? Or if there's any synergy by putting these -- the functions in molecule? Those are 2 questions.

Okay. Thank you, Miki. So the first question on ENTYVIO to Julie and the second on 3001 to P.K., please.

Thanks for the questions, Miki. In terms of the growth, what I would say is this, as I mentioned earlier, ENTYVIO has been able to hold share -- patient demand share in overall IBD. And what I would expect without giving any predictions about growth and whatnot that we'll provide for FY '26 in May. I would say that our growth is in line with market at this point in terms of patient demand, and we expect to be able to hold our share given the fact that we're still the only gut-selective molecule in IBD and the strong track record that we have, particularly in UC.

And as I mentioned, where we see the significant competitive challenges is in CD thus far. In terms of the peak at this point, we are not changing our overall peak revenue guidance.

Thank you. And to add on related to IBI3001, happy to bring this forward. So we agreed and when discussing the data and the potential for this molecule with Innovent, it was based upon a few elements. The first is the fact that these targets are very well harmonized with our current disease area strategy in solid tumors, particularly in GI and thoracic cancers. These target specifically.

And the second element is that we believe that, as they should target 2 elements and then use the same novel exatecan payload as well as platform that they would be able to very specifically harness a payload and result in more encouraging efficacy. We've seen some elements of that thus far in the earlier doses, as I noted, and we will continue to monitor as we progress up the dose levels.

[Interpreted] Thank you very much. With this, we'd like to conclude today's webinar. Thank you very much for your participation today. We'd like to ask for your kind continued support. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Okay. So good evening, and good morning, dear investors and analysts. So thank you all for joining Innovent Investor call today. Earlier today, we just announced a significant global strategic collaborations with Takeda. So we are hosting this call to share details and to discuss the strategic importance with us.

So before we begin, I'm very honored to introduce a special guest from our partner Dr. P.K. Morrow, the Head of Oncology Therapeutic Area Unit of Takeda, who will join us for the discussion later on.

So I will brief you today's agenda as follows. So Dr. Michael Yu, the Founder, Chairman of the Board and CEO of Innovent, will open with an update on Innovent's Globalization Strategy. Follow that, our CBO, Dr. Samuel Zhang, will then review the partnership arrangement and introduce Takeda as our partner. And after that, Dr. Hui Zhou, the Chief R&D Officer for Oncology pipeline of Innovent will present the details on the programs in the collaboration. So we will follow the presentation with a Q&A session, during which Dr. P.K. Morrow will also join the discussion.

So with that, I will invite Dr. Yu to begin, please.

Excellent. Thank you, Wendy. Good morning, and good evening to each one of you. And welcome to joining our conference call tonight today. And I'm thrilled to announce our strategic partnership with Takeda, which will focus on the global development of our next-generation and oncology assets.

Before we dive into the detail of the partnership, I just want to give you a brief introduction to Innovent's mission and goals, which described in this first slide, which is Slide 3. And at the beginning of our second decade, as some of you know that Innovent was found in 2011. So at 2021 the end of our first decade, we at our strategic meeting, we set a clear goal for the second decade which by the end of 2030, the company want to become a global premier biopharma. That was the goal we set for the company.

The key to achieve that strategic goal is they actually need a 2 key pillars. The number one, we needed to develop a global competitive products, which will address unmet medical needs worldwide not only in China. Number two, to build a world-class global organization. Such an organization will have expertise and a capability in global development, regulatory filing as well as commercialization. So those are the 2 key pillars, we believe, will enable us to achieve our strategic goals.

Next slide, Slide 4. In terms of the product, which is, we believe, the first pillar to achieve our strategic goal is to build a robust pipeline. As you may know that Innovent has been focused on 4 disease areas from oncology, immunology, CVM and ophthalmology. So in the last couple of years, we have been very productive from our own labs. In this slide, to give you a few examples from different stage of development from IND-enabling study to Phase I and II, to pivotal MRCT trials.

We have over 10 assets, which potentially could become the product, meet the criteria we described earlier.So the goal to achieve our strategic goal is to -- as we shared with you earlier, is at least we can to have 5 assets going to be in MRCT Phase III studies. That's our first pillar.

The second pillar, which is described in Slide 5, related to global development capabilities. Currently, we have about 100 people in U.S. cover from wet lab discovery research to development, including medical operations, regulatory as well as the -- some of the early development talents. And this team, we have achieved a few very significant milestones including the approval of IND for pivotal trial for one of the product we couldn't not talk about today which is IBI363. And our goal is to develop further growth team, develop the capabilities to meet the strategic goal we described earlier.

Next slide, which is Slide 6. When I look back for the last 14 years, Innovent has been heavily depends on the partnership or collaboration arrangement with a variety of companies globally. For example, in 2015, we entered a partnership with Eli Lilly. And since 2015, we expand 6x now with Lilly from oncology to beyond the oncologic disease areas. We strongly believe the partnership we're entering today with Takeda will do the same to the growth of our business. The partnership not only give us the opportunity to work the best company in the world at the same time, an opportunity to us to learn from our partners in terms of how to develop and scale up the capabilities we are targeted to have.

So by leveraging the both parties expertise in each collaboration, we have been able to advance the key tasks we found more efficient, more effectively than we could through internal efforts alone.

Next slide, Slide 7. So today, we are very thrilled to announce a landmark strategic partnership with Takeda for the global development of our next-generation IO and ADC assets. This collaboration we consider as a transformative. The two parties, we share the same vision, and we feel that Takeda is the best fit for what we try to do in many aspects.

Co-development and co-commercialization partnership for one of the products will allow us to work and learn with our partner every step of the way to grow our global capabilities and potentially become a truly global biopharma. For our collaboration assets, both IBI363 and IB1343, the two parties had a thorough discussion on the future development plan. And both parties are committed and confident that our combined efforts will maximize the value of those assets and will significantly enhance the growth of our company in the future.

So this is just a very brief introduction about the announcement we made today. So next, I would like to hand over to Sam, our Chief Business Officer, to introduce to you the deal in detail and our partner. Sam, please.

Thank you, Dr. Yu. It's my great pleasure to be here today. We are very excited about this global strategic partnership with Takeda. And this is not only China's largest -- next slide, please, largest strategic collaboration. For the first time, a China-based biotech strike a co-development, co-commercialization deal with more than $1 billion in upfront. Furthermore, the total deal value ranked #2 among all biopharmaceutical global partnerships.

On the Merck Daiichi partnership, 3 well-differentiated late-stage ADC assets had more deal value. Not only that, this deal is going to create long-term value because of the co-development, co-commercialization structure on IBI363, our next-generation IO foundation therapy. This is not just bring financial value to the company, but also help us to build strategic capabilities as Dr. Yu just laid out for our globalization effort.

We were very, very careful about picking the right partner. And when we were looking for the right partner, obviously, there is a basic requirement for the capability and resources. And we also feel that share the strong conviction of our assets is particularly important. We have a strong belief in our IBI363 as a transformational next-generation IO therapy because it is 2 magnet action -- both of the 2 magnet action are IO-based and therefore, are very well differentiated.

As you may know very well, the IO mechanism of action has a potential to bring real difference to patients' life, extend survival and potentially have really bring transformational change to patients' life. And therefore, when we are looking for a partner, we're also looking for partner who have a strong conviction and strong belief and has a really strong strategic fit of IBI363 can really help their organization in a dramatic way.

And last but not certainly not the least, we're looking for a true collaboration, a team spirit. And then we find Takeda. Takeda is a truly global company. It has more than $30 billion in annual sales and 52% of that coming from the U.S. When you combine U.S. and Europe, in total, it has more than 75% total revenue. The company had business over 80 different countries and has employees in 24 different countries. And in total, they have 50,000 employees around the globe. It has a very strong capability. More importantly, as soon as the 2 companies start to work together, we find very strong chemistry and the team has a very -- just worked together so well from beginning to now and to the future.

Furthermore, we feel that Takeda is a great model that has really turned Asia regional player into a global powerhouse and therefore, have a lot for us to learn. And therefore, we think Takeda can be a really ideal partner for us in this journey to really help us to achieve success in globalization effort. As Dr. Yu mentioned, particularly Takeda, their commitment to this partnership really coming from the leadership level, and this really distinguishes Takeda.

Next slide. Not only Takeda has overall very strong capability from global R&D perspective, as you can see, it also has a very strong footprint across geographic regions. Cambridge, Massachusetts is their U.S. headquarter and also U.S. R&D center that we have visited many times. And certainly, Dr. Morrow can comment more on that. And 45,000 across different countries, really strong development capability in North America, in Europe and Japan.

In particular, the oncology leadership, next slide. Dr. Teresa is a very strong leader from a commercial perspective, and Dr. Morrow is a very strong clinical leader. And Teresa actually led the nivolumab global launch in the U.S. As many of you know, in the beginning, nivolumab really was a very -- nivolumab launch was one of the most successful global launch. It was able to achieve $3 billion, $4 billion per year sales in just over 2 years. And all those are under leadership of Teresa.

So with Teresa as a leader of Takeda's Global Oncology business unit President, we feel very confident that IBI363 global commercialization is going to be really successful.

And Dr. Morrow is a very strong R&D leader who was a professor at MD Anderson, I mean the top-notch cancer center in the world and also spent many years at Amgen, where many clinical research leader from the industry came from. And before he -- she took the head of R&D Head for Oncology at Takeda, she was also a Chief Medical Officer at CRISPR Therapeutics.

So with Teresa and Dr. Morrow leading Takeda Oncology from business side and clinical development side, we feel very confident that our assets are in really good hand and can maximize its benefit to patients and realize commercial value. And in particular, in IBI363 in the codevelopment, co-commercialization model, we can also work hand-in-hand with Takeda to really develop our global development capability and also U.S. commercialization capability.

Next slide. So just to give you a little more color about the strategic partnership. As Dr. Yu mentioned, it involves 3 different assets. IBI363 is a PD-1 IL-2 bispecific, which has clinical validated across 1,200 patients and has demonstrated superior efficacy over the existing PD-1 and in particular, in large unmet medical need, non-small cell lung cancer and also the so-called immune cold tumor MSS CRC. And both has a really high unmet medical need in two different ways.

In non-small cell lung cancer, once patient receive the standard of care, let's say, PD-1 chemo, really, there's not much -- there's no immunotherapy that can work really well. And IBI363 as a single agent has offered a robust clinical activity demonstrated so far. And Dr. Hui is going to comment more on that. And that also shows the great potential to move into first line as well. And in microsatellite stable CRC, so-called immune cold tumors, the current standard of care PD-1 therapy just don't work at all, basically 0% response rate. As a single agent, IBI363 has double-digit response rate, clearly demonstrate clinical proof of concept. And both Takeda and Innovent has a strong commitment to really move this quickly through clinical development, not only in this particular indication, but also explore in other potential uses.

For this particular assets, we have a global co-development 40/60 cost share and in the U.S., profit and loss share. And this, we believe, is going to enable a long-term financial return, but more importantly, strategic capability development in this as we are going hand-in-hand with Takeda. Ex-U.S., ex-China, Innovent is going to receive sales royalty up to high teens. And during the development stage, we also receive potential development and sales milestone as well.

For IBI343, this is out-licensing deal, and we also feel Takeda is very well positioned to maximize the potential value of these assets and the GI targeted as the main indication of IBI343, we think Takeda is particularly well equipped to maximize, it is global development as well as commercialization.

And for this asset, Innovent is to receive potential milestone and also to receive sales royalty up to high teens. And the third asset is the option of ex-China right. This is our first-in-class EGFR B7-H3 ADC. Once Takeda decided to exercise option, Innovent is going to be receiving option exercise fee and a milestone payment and sales royalty. So this is the high-level review of the key terms and the deal structure.

Next, I'm going to ask Dr. Zhou Hui, our Chief R&D Officer for Oncology to go into more details of these assets.

Yes. Thank you, Sam. So as Dr. Yu and Sam mentioned that -- so today, we are really exciting to announce this strategic deal with Takeda. Actually, during almost last 1 year, we had deep discussion with Takeda's team, both are exciting about 2 assets scientific data and indication opportunity. We have fully aligned on 2 molecules future clinical development plan. And also, we are looking forward to collaborate together.

So next. So IBI363, I think you may already familiar with this molecule. We believe this is -- we call the next-generation IO. And as you know, so this molecule designed with Alpha bias, so global first in class. Till now, we almost dosed over 1,200 patients, and we already have the melanoma study, the first registration study in China and also the global level, the IO-resistant squamous non-small cell lung cancer global study, we already approved from FDA and prepare for the initiation.

And also for the third-line CRC also, we plan to initiate in China first. And also, we have more ongoing and other broader cancer population, we call the POC study. And also, we already have received multiple FTD or BTD from different agency. So next is our summary about the data for IBI363. So you can see that have strong immune activation and so across different tumor types, different indication, especially for the IO resistant squamous or non-squamous non-small cell lung cancer and also the melanoma patients and also the late-line MSS colorectal cancer.

So here in summary actually, the key is from our ASCO presentation, so from different angle and to show the significant of improvement from the treatment of IBI363. And next is about our -- in our mind that IBI363 have a broader coverage, although we began from the IO resistant population and cold tumor population, but we still believe that this molecule could also cover IO-naive population. So that means we believe that cover even that means all-comers and across the different indications.

And now as we shared with you in the past that the first wave, we focus on monotherapy in late line. And now we're also moving to the second wave. So the first-line non-small cell lung cancer, the first-line CRC and also, we are planning for more proof-of-concept study in other first-line indications and also including the neoadjuvant, adjuvant setting and in combination with our ADC, for example, now we have the IBI343 and 301 and also have a collaboration with our Takeda for the further global development.

So as we discussed, so both parties actually fully aligned that on the overall clinical development plan, especially that for us that we believe the first-line lung and first-line CRC is the most important indication. We would like to maximize the value of IBI363 in both indications.

Okay. Next, so 343, as we also shared with you that for this molecule, we believe that also differentiation molecule design, especially we have Fc-silent and site-specific the glycan conjugation. So this enables this molecule have the better safety profile that especially improved in terms of GI safety profile. So that means for us, it also could be, again, in combo with other potential treatment and also because of such kind of stable linker payload, we have a few hematology toxicity. So we can combo with other chemo again.

And because of high potency payload so -- and also combined with the overall the molecule profile that we show the differentiation of the data for the PDAC population. So in total till now, we have over 340 patients dosed in gastric, PDAC and other tumor types. And we have the ongoing MRCT study in gastric cancer. And also this year, we announced that we initiated the Phase III study in third-line PDAC in China. We also received multiple FTD and BTD from the different agency.

So next, about the key summary for the data. So for the gastric cancer, we published our data in Nature Medicine. So we also already have the oral presentation for the PDAC part, especially we believe that our molecule that potentially improved the PFS and OS in such highly unmet medical need disease. So we are also really exciting about this data.

Okay. Next, for the key focus of 343, I think that based on CLND18.2 expression level, gastric cancer and the PDAC is our key indications. So for us, actually, we also aligned with our partner, Takeda, that the first-line gastric cancer and first-line PDAC is our key focus for the next -- we will support our partner for further the clinical development in both indications.

And for the third molecule, which is the option in potential the right from our partner, so 3001, this is a global first EGFR/B7H3. And also, we shared with you that for this molecule that share the same linker payload platform and because of wide coverage of expression level of EGFR and B7H3, we believe that this molecule could target a lot of different tumor types. But for us, that actually we focus on the tumor types with B7H3 expression level first and also we will consider the EGFR expression level.

So we identified that, for example, the esophageal cancer and also the head and neck and also PDAC as well, but also widely the potential for the non-small cell lung cancer. And also, we already saw the encouraging signal from ongoing Phase I study in U.S., in Australia and China. So we will update with you about the clinical data in the future academic conference.

So in conclusion that we believe that the collaboration -- this collaboration will fully unlock greater value of our pipeline by combination 2 parties strength and efforts. This is also important for Innovent to for our global operation by a deep co-co partnership with Takeda. Two parties will benefit from this partnership and Innovent will maximize our long-term value, including financial returns, global influence and industry credibility. Thank you.

Okay. Thank you. Dr. Hui. So with that, we conclude the presentation part, and we will now open up for questions on the line. So I think the first question go to Ziyi Chen from Goldman Sachs.

Basically, it's two questions. We do have the curiosity to understand the views from both Innovent and Takeda about the deal. For Innovent, what do you eventually make you feel this collaboration with Takeda is the best fit to Innovent's globalization road map. I think this has been a milestone deal for Innovent. This is the first major one for the core assets going into global. So what could potentially be the synergy? And why do you choose to do a co-development? I think this question could potentially address to Michael and Sam.

And also for Dr. Morrow from Takeda, we're also trying to get a view from you that why did Takeda choose Innovent as a partner? And particularly, if we look at Takeda's portfolio in the past few years, oncology now currently about 12% of the sales. And there are 4 business segments in terms of revenue contribution is larger than oncology. So how should we see the strategy position of the oncology within Takeda? And how does Takeda see its oncology business in 5 to 10 years? And particularly, how would IBI363 and IBI343 fit into the strategy? Because we feel like Takeda do have a very strong presence in gastrointestinal cancers, including colorectal cancers, but what about lung cancer? I try to understand a bit more on that.

Great. Thank you, Ziyi, for the question. So I will take the first one and ask Dr. Morrow for the second question. Why Takeda? As Sam and in his introduction about our partner, you probably already hear that lots of numbers and with all the credential credibility about that Takeda has built in the last over 200 years. Takeda, as you know, is a great company with a long history, probably one of the longest history in our pharma industry, over 240 years. So now become the leading biopharma in the world in several disease areas.

We strongly believe based on all the facts and what we learned during the interaction over a year now with our Takeda colleagues, not only we see that Takeda has a development capability, commercial capability and the team and all the talent individual we have interaction with. As an example, Dr. Morrow, you're going to talk -- she's going to answer your question. And all the professional, we have a lot of respect and mind from us. Of course, Takeda has resources. So those, I think, the facts that help Innovent help me made the decision. We feel that Takeda is the best company can help us to maximize the value of the assets in both in IBI363 and 343.

And at the same time, we feel that Takeda also is the best company who can help Innovent in achieving our strategic goals. And I remember that in several our annual strategy meeting, Takeda has been a showcase for us. When we talk about globalization, Takeda always is our best examples. We would like from regional company go to global and the step they took. And I believe they have learned lots of -- and accumulated lots of experience, which Innovent can learn from.

And at the same time, as you may know that when we're asking for co-development and co-commercialization for a company like Innovent, and most of -- many companies we're interacting with, they may have a hesitation. So I'm very grateful to Takeda from the CEO to all the individual colleagues we have interaction with. They give us the opportunity to leverage what they have and help Innovent to achieve our globalization strategic goals. So those are I believe that besides additional to the fact that we talk about is the -- make us feel that Takeda will be the best -- is the best company as a partner for the partnership we have selected.

So we strongly believe that with the -- all the vision we shared that the capability they have, the partnership will be a very productive. And all the key assets we have in the partnership will be have -- we're going to maximize the value through the collaboration and in the years to come. So those are the two major aspects we consider when we form a partnership with Takeda.

Thank you, Michael. And maybe I can add from the Takeda standpoint, we really are honored to work with Innovent. We believe that Innovent is a strong strategic, scientific and clinical partner for Takeda. And specifically, as you asked, IBI343 and IBI363 align directly with our prioritized strategic modalities, which have been ADCs, biologics and small molecules. So they are among those -- 2 of those 3. And the prioritized tumor areas, which include GI and thoracic tumors also are well aligned and truly fit hand in glove with the Takeda oncology strategy, which, as you know, has also been based upon success with therapies such as fruquintinib as well as brigatinib.

So we are delighted to partner with Innovent. This is truly, we believe, an accomplished team with very deep expertise in next-generation immuno-oncology as well as understanding ADC biology. When you asked about the oncology portfolio, I would note that this really helps us to further balance our pipeline across heme cancers for which we're very well known and now with more solid tumor indications potentially. IBI343 and 363 are both important investigational medicines for our oncology pipeline and also for the broader Takeda pipeline. And we're really encouraged by the ability for these therapies, having dosed so many patients and having such encouraging data to address significant unmet need near term as well as for the future.

Then we will take the second question. So the next question goes to Dr. Huang Yang from JPMorgan.

This is Yang from JPMorgan. So I have two quick questions, one for Innovent management and one for Dr. Morrow. Maybe first one for Dr. Morrow. So from a scientific and clinical standpoint of view, what does Takeda or you think as a key advantage and the market opportunity for IBI363 and IBI343?

Thank you so much. I would note specifically that these 2 therapies, and I'll start with IBI363, which is truly an IO-IO therapy, combining both IL-2 alpha bias as well as PD-1 mechanism of action in a novel way to potentially be very effective in both the second line as well as in the frontline settings in lung cancer and in other tumors. So we are very encouraged by the data that Innovent has shared with us, and we believe that it has potential to really help patients with thoracic cancers and in immune deserts such as MSS CRC as well as other potential life cycle management indications.

For 343, the novel platform as well as the widened therapeutic index with very encouraging and durable efficacy, tolerability as well as the ability to be dosed and combined to become part of potential other frontline therapies for gastric cancer and pancreatic cancer are very encouraging to us also. I would not note the market, but I would say that we're very encouraged by the ability to reach as many patients with clinical unmet need as possible. Thank you.

Yes. My second question is for Innovent team. So I know a little bit more about your global development plan because you already started 1 global Phase trial, right, in second line squamous non-small cell lung cancer. So can you give us some more color on what additional global Phase III or late-stage trial you might consider to start or initiate in the next few months or years? And what could be potential development cost for 363?.

Okay. Hui, you may...

Okay. Thank you for your question. So yes, as you know, we already announced that the first global MRCT IO squamous non-small cell lung cancer approved and plan to initiate. And also, as we shared with you that now we have a really good discussion and align on the overall clinical development plan with Takeda. And for the further global clinical development plan, so actually, we have a lot of discussions. And also, as Dr. Morrow said that we will focus on the lung cancer and CRC and for the time line or the details about such kind of plan, so actually, we will work with Takeda and then to share with you more about the future update. So thank you. So cost... okay.

Yes. Can you quickly comment on potential development costs? How much Innovent might have to spend to develop globally for 363 in the next few years?

Yes. Thank you, Dr. Huang. Maybe I can give overall color on the overall development budget. You may be interested to ask. So I think, first of all, the two parties have conducted in-depth and detailed discussions and reached alignment on the overall clinical development plan for both IBI363 and IBI343. The target indications and the related budgets for both programs have been clearly defined. And secondly, we will use the POC plus MRCT model to balance the risk and reward of the investment. The MRCT will be initiated with the supportive data from POC.

And thirdly, if we think about the financial position of Innovent, we actually have more than USD 2 billion in cash on hand. This strong financial position will primarily support the company's pipeline development and global expansion. Innovent's China business continues to demonstrate strong growth potential and improved profitability, providing the group with a very stable and sustainable positive operating cash flow. So based on the development plan, time lines of IBI363 and 343, Innovent's financial strength is expected to be sufficient to support the joint global development efforts. Thank you, Dr. Huang.

Okay. So the next question goes to Chen Chen from UBS.

First of all, congratulations on your landmark deal with Takeda. It's really exciting to see that 363 find a best fit. Well, following this question, can management and Dr. Morrow, please help us understand how can the two parties leverage the perspective strength to fully unlock the value of these assets. For instance, how will Innovent's R&D experience and expertise in IO and also ADC support this collaboration? And Dr. Yu just now has highlighted Takeda's global experience, network and capabilities. Well, can management please also elaborate a bit more on well, in what way will Takeda's experience and capabilities contribute to the R&D and commercialization of these two assets?

Great. Thank you. Maybe we'll go with Dr. Morrow first and then Dr. Hui.

Thank you, Michael. So we at Takeda are very energized by the progress that Innovent has made to date, and we really look forward to the ability to collaborate in lockstep in order to, as you allude to, truly unlock the potential of these programs for which we find extremely encouraging data and great promise. So drawing from our shared deep experience in oncology, Innovent IO technology as well as expertise and the fact that the modalities that are leveraged by 363 and 343 are areas of our shared expertise. We feel that the two of us as partners are uniquely positioned to partner to accelerate and expand the potential of both of these agents in a range of solid tumors.

And specifically, when I deep dive into those two elements specifically, for 363 as a next-gen IO-IO therapy, it has the potential to be highly effective in second line and earlier lines of therapy as well as in immune cold and IO-resistant tumors, giving an ability to demonstrate significant monotherapy as well as in combination in a multitude of solid tumors. And for 343, this next-generation ADC gives us great confidence in the ability for it to meet critical unmet need. And we believe that our partnership and leveraging not only the operational efficiencies across the two companies, but also our broad opinion leader network and engagements will help to continue to accelerate both enrollment as well as completion of these trials and moving them hopefully towards a potential future multiple approvals.

Thank you, Dr. Morrow. So about Innovent part, so especially our expertise in IO and ADC. So as you know, so for IO, we have the backbone sintilimab and post-sintilimab, actually, we also have several other bispecific or different IO assets. So actually, for us, we learned a lot from sintilimab and other IO assets, especially through the clinical development and molecule design. So those actually help us to build up the foundation to currently what we already see from IBI363, actually, this really help for us for the overall development of IBI363.

And for ADC in last 5 years, actually, we already built up 3 different platforms, 2 is single payload platform and the third is dual payload platform and over almost 20 assets. So we also have actually from ADC part, we already built up our such kind of clinical development capability.

And for Innovent, I think, as you know, so our unique opportunity is that for China part, so especially for the efficiency, the clinical data generation. So we can continue to leverage such kind of advantage to generate the POC quickly, high quality and to support further global clinical development and leverage the expertise of Takeda in the global level experience and to work together to maximize the value of both assets. Thank you.

Thank you. As we have almost -- the call has run almost for an hour, I think maybe we can just have one last question before we end. I think the last question goes to Wangbin Zhou from Citi.

Congratulations on the remarkable collaboration. So maybe I have two quick questions. The first to Dr. Zhou on the following catalysts for the IBI363. So given we are doing the Phase II POC studies for the first-line non-small cell lung cancer and CRC and also a global Phase II U.S. trial. So when do we -- when can we have some more data for these trials? And also a quick question for Dr. Morrow. So to follow the 363 plus ADC. So currently, the IO plus ADC is a new trend and 363 should be a new cornerstone product in the IO space. So how do we maximize the potential of this product and our future combination strategies. And we know that we have the option for the EGFR/B7H3 is the right? So could you give us more color on this?

Thank you. For the first question. So as we shared with you in the past that we believe IO resistant population and IO naive population are different population. So that means although we generate a lot of data already in IO-resistant population as a monotherapy, but we believe that we cannot just copy the dose level from the later line population. So that means for move to the first line, we still need to generate the safety line and also the dose optimization study and further potential the proof-of-concept data. So that's why we are still have such kind of ongoing study in first-line CRC and first-line non-small cell lung cancer.

And so now we collaborate with our partner, Takeda. So for the overall publication plan and the future, so what the timing of the -- which conference we will disclose. So we will work together with our Takeda team and then to have overall publication plan, and we will share with you in the future investor call or through IR. Thank you. So I think then Dr. Morrow for the second question.

Thank you. And along -- in answer to your question, we agree both companies have strong scientific and clinical conviction around not just the data, but also the scientific mechanism of action of 363. We've discussed in great depth, and we're fully aligned on the development plan, which reflects truly the shared conviction in both the biology as well as the ability for it to meet unmet need. If I could divide it into 3 areas in which we have the greatest focus, one, of course, is ensuring that we are effective and are developing in indications in which patients have progressed or developed resistance to frontline or earlier lines of IO.

Second, the ability to be used in combination, potentially even in a novel, novel mechanism or others in earlier lines of therapy or as monotherapy. And thirdly, to be effective in potential immune deserts or in cold tumors in which IO therapies have not been effective. We've discussed this in great depth with Innovent, and we believe that we are fully aligned on hoping and working to maximize the potential of 363.

Thank you. Now we are approaching the end of our scheduled time. So let's wrap up today's call. Again, thank you all for your valuable time and the questions during today's investor call. So we hope today's discussion has helped you again get a clear understanding of the strategic value of our global collaboration with Takeda as well as the potential of our joint IO and ADC programs to global cancer treatment.

And also a special thank you to Dr. P.K. Morrow from Takeda for joining us and sharing your valuable perspectives. This partnership truly embodies the power of global collaboration in the biopharmaceutical industry, I believe. So for any follow-up questions, please feel free to reach out to our Investor Relations teams. And once again, thank you for your ongoing support of Innovent Biologics. So with that, we will conclude today's call. Thank you.

Thank you.

Thank you.