Eisai Co.,Ltd. Q4 FY2025 earnings call

• Core Product Positioning & Performance

  • The three flagship 3L products (LEQEMBI for Alzheimer's disease, DAYVIGO for insomnia, LENVIMA for cancer) are all global category leaders developed in-house by Eisai, driving the company's organic growth.
  • LENVIMA: An oral multikinase inhibitor approved for 5 cancer types, with 620,000 patients treated across 81 countries 10 years post-launch; growth was driven by advanced renal cell carcinoma (RCC) in the U.S., and the LITESPARK-11 trial met its primary endpoint with a PDUFA date of October 4, 2026 set by the U.S. FDA.
  • DAYVIGO: The global top-selling dual orexin receptor antagonist (DORA) for insomnia, approved in 27 countries; it holds the #1 market share in Japan even with generic competition, and the company is launching new telehealth-enabled initiatives in the U.S. and pursuing EMA approval in Europe.
  • LEQEMBI: The global #1 anti-amyloid treatment (AAT) for early Alzheimer's disease, approved in 53 countries; long-term clinical data confirms sustained slowing of cognitive decline over 48 months, with larger effect sizes for earlier treatment initiation and early efficacy onset, and real-world data shows 67% of patients continue treatment after 2 years.

• AD Diagnosis & Treatment Transformation

  • Two key innovations have removed historic bottlenecks for AD treatment access: blood-based biomarker (BBM) Abeta confirmatory testing, and LEQEMBI IQLIK (self-administered auto-injector) subcutaneous treatment.
  • BBM testing is lower cost, less invasive, and more accessible than conventional PET or CSF testing; penetration has grown rapidly, reaching 50% of all U.S. Abeta confirmatory testing in fiscal 2025, with BBM now covered by CMS reimbursement and recommended by clinical guidelines, driving 1.8x annual growth in total AAT patient volumes.
  • LEQEMBI IQLIK (subcutaneous self-administration) offers major convenience over traditional IV infusion, with 15-second injection times and at-home/ nursing home administration. IQLIK for maintenance was approved in August 2025, and IV/IQLIK are complementary, with both modalities growing and IQLIK lowering barriers for new patients to initiate treatment, growing total market size.

• Organizational & Financial Updates

  • Eisai introduced core operating profit as a new metric to reflect underlying organic earnings power, excluding 5 categories of one-off temporary income/expenses not linked to future earnings.
  • The company also introduced adjusted ROIC as a new medium-long term capital efficiency metric, replacing ROE (which was distorted by large foreign currency translation impacts on equity); the 2025 adjusted ROIC is 6.8%, with a medium-long term target of 8-10%.
  • Two oncology product in-licensing deals were completed in fiscal 2025 to support pipeline growth, and the company is preparing to issue corporate bonds to diversify funding sources for future strategic investments.

• Pipeline Progress

  • Eisai is the only company with promising pipeline assets targeting all three ATN (Amyloid, Tau, Neurodegeneration) pathologies of Alzheimer's disease: the AHEAD 3-45 preclinical AD trial for LEQEMBI is ongoing with top-line data expected in fiscal 2028; the anti-tau antibody etalanetug has two ongoing Phase II/III studies, with top-line data expected in coming years; and the TrkA synapse regeneration candidate E2511 is set to enter clinical development.

Consolidated total revenue for fiscal year 2025 was 825.4 billion yen, an increase of 4.6% year-on-year to a new record high. The core Pharmaceutical business segment, which accounts for 100% of the company's organic revenue, drove this growth, with the company's three flagship 3L products (LENVIMA, DAYVIGO, LEQEMBI) growing a combined 68.3 billion yen year-on-year, absorbing 6.6 billion yen in declines from other products including those facing loss of exclusivity. By individual product: LENVIMA recorded revenue of 342.5 billion yen, up 4% year-on-year, and is now Eisai's top brand; DAYVIGO recorded global revenue of 64.3 billion yen, up 20% year-on-year; LEQEMBI recorded global revenue of 88 billion yen, up nearly 100% year-on-year (with 44.6 billion yen from the U.S., 24.4 billion yen from Japan, 12.4 billion yen from China, and 6.6 billion yen from the rest of the world). Other non-core business revenue decreased 25.8 billion yen year-on-year due to the absence of an upfront rights transfer payment recorded in fiscal 2024. Consolidated operating profit was 44.1 billion yen, down 18.8% year-on-year, while the newly defined core operating profit (excluding one-off temporary items) was 50.1 billion yen, more than doubling from 23.8 billion yen in fiscal 2024.

• For fiscal year 2026, Eisai projects consolidated revenue of 883.5 billion yen (a new record high), with both operating profit and core operating profit targeted at 70 billion yen, representing significant year-on-year growth. Adjusted ROIC is targeted at 8.7%.
  • LEQEMBI revenue is projected to grow 63% year-on-year to 143.5 billion yen, driven by continued robust growth across all regions, enabled by wider adoption of BBM testing and the upcoming launch of IQLIK initiation treatment.
  • LENVIMA revenue is projected to grow approximately 1% year-on-year to 345 billion yen, and DAYVIGO is expected to deliver continued double-digit revenue growth.
  • R&D expenses will increase to support investment in next-generation pipeline assets, but overall expense growth will be controlled to a high-teens percentage rate.
  • LEQEMBI is expected to achieve profitability (excluding R&D expenses) in fiscal 2026, with substantial improvement in the product's profitability contribution.
  • Approval of LEQEMBI IQLIK for initiation treatment is still expected, following a 3-month extension of the PDUFA date for labeling language adjustments; the extension has no impact on approvability, with approval expected in the first half of fiscal 2026 in the U.S., Q2 2026 in Japan, and Q4 2026 in China.

• Uncertain global and regional business environments led Eisai to forgo planned product out-licensing and divestment transactions that were expected to generate one-off income in fiscal 2025, resulting in lower-than-planned operating profit.
  • Structural reform costs in Europe were significantly higher than originally planned, due to greater uncertainty around regional reimbursement conditions, and complex country-specific labor and legal environments that made accurate upfront estimation difficult.
  • The PDUFA approval date for LEQEMBI IQLIK initiation treatment was extended by 3 months due to required labeling language adjustments, though management does not expect this to impact approvability.
  • Proposed U.S. drug pricing reforms including the Most Favored Nation (MFN) pricing framework and Medicaid drug price controls remain uncertain, with no final rules published as of the call; management notes there is no expected immediate impact and is preparing for potential changes, but long-term pricing outcomes could impact profitability.
  • BBM testing for confirmatory Abeta diagnosis has a small 5-10% error rate compared to PET testing, which could limit adoption among some physicians, though newer tests are expected to reduce this gap over time.

Q: Why did fiscal 2025 operating profit miss the original plan, and has the company changed its target of 8% ROE / its profit growth outlook? / A: The primary misses were the elimination of expected one-time income from canceled out-licensing/divestments (driven by changed market conditions, as management prioritized retaining assets for long-term growth) and much higher-than-planned European structural reform costs. The 8% ROE target was originally tied to expected one-time gains; management still retains a commitment to returning ROE to target levels through ongoing organic growth, and has introduced adjusted ROIC to avoid distortions from uncontrollable foreign currency translation gains that have inflated equity and reduced reported ROE recently. We have not changed our underlying message of sustained organic profit growth. (328 characters)

Q: What is Eisai's pricing approach for LEQEMBI IQLIK, and will switching to IQLIK increase patient out-of-pocket costs? / A: Eisai's core pricing principle for IQLIK is price parity: we aim to keep total patient economic burden (including drug cost and associated medical/procedure costs) identical between IQLIK and conventional IV infusion. Even with the different dosing structure for initiation, and allowing for flexible switching between the two modalities, we will maintain consistent total patient out-of-pocket cost. (267 characters)

Q: Biogen recently released positive Phase II data for an anti-tau Alzheimer's treatment; how does this impact Eisai's etalanetug (anti-tau) development program? / A: We view Biogen's positive data as supportive of the entire anti-tau drug development field, which validates our path for etalanetug. Our candidate targets the MTBR core region of tau, which is key to blocking tau propagation, has good safety even at high doses, and we have already seen dose-dependent biomarker reductions (including tau PET reductions) in patient cohorts. We have increased confidence in our program's path forward. (301 characters)

Q: Will the 3-month PDUFA extension for LEQEMBI IQLIK initiation lead to lower 2026 guidance than originally planned? / A: Management views the extension positively, as it gives additional time for launch preparations. IQLIK maintenance treatment is already widely available on the market, and after initiation approval, growth will accelerate immediately. While there may be a slight timing shift, the impact on the full-year 2026 plan is expected to be very limited, and coverage will be available immediately post-approval regardless of timing. (284 characters)

Q: Will LEQEMBI be profitable in fiscal 2026, and will elevated SG&A investment for LEQEMBI offset profit growth? / A: Our original plan projected LEQEMBI would reach profitability (excluding R&D expenses) in fiscal 2026, and that expectation remains on track. Most of the fiscal 2025 SG&A increase was one-time structural reform cost plus 20 billion yen in one-time launch investment for LEQEMBI; we expect substantial improvement in LEQEMBI's profitability contribution in 2026. (252 characters)