Takeda Pharmaceutical Company Limited Q1 FY2024 earnings call

• Overall, Takeda had a positive start to FY '24 with revenue growing 2.1% at CER. - Growth & Launch Products drove revenue, now representing 46% of total revenue and growing 17.8% at CER. - ENTYVIO growth accelerated with the launch of ENTYVIO Pen in the U.S. - Immunoglobulin portfolio including TAKHZYRO, QDENGA, and FRUZAQLA showed robust growth. - Actively managing the life cycle of Growth & Launch portfolio, with approvals like LIVTENCITY in Japan and FRUZAQLA in Europe. - Core operating profit margin was 31.6% due to phasing of R&D investment, reduction in other OpEx, and temporarily lower VYVANSE generic erosion. - Efficiency program focused on increasing organizational agility, improving procurement savings, and leveraging data/tech across Takeda. - Pipeline advancements with option agreements with Ascentage and AC Immune, and progress in organic pipeline.

In Q1, Takeda's Growth & Launch Products grew 17.8% at constant exchange rate (CER) and represent 46% of total revenue. ENTYVIO grew 7.6% at CER, with growth accelerating due to the launch of ENTYVIO Pen in the U.S. TAKHZYRO had a strong momentum with 19.8% growth at CER. In the PDT segment, immunoglobulin grew 21.9% while albumin declined 14.2% due to anticipated phasing of supply to China. FRUZAQLA had revenue of JPY 11.9 million in Q1, with EU approval in June and Japan approval anticipated soon. QDENGA is available in 21 countries, saw strong demand, and was added to the WHO's list of pre-qualified vaccines.

• Full year FY '24 outlook unchanged. - Will monitor VYVANSE generic erosion, portfolio performance, and FX rates. - R&D investment expected to be weighted more heavily in the remainder of the year. - Cost efficiency program savings expected to ramp up in coming quarters. - VYVANSE generic erosion expected to come back in line with projection.

• Potential generic erosion of VYVANSE in the U.S. - Biosimilar competition for ENTYVIO. - Supply constraints for QDENGA due to high demand relative to manufacturing capacity.

Q: About VYVANSE, current situation and second quarter revenue impact; and about immunoglobulin, measures to improve OP margin.

A: Julie Kim commented on VYVANSE that supply from generics companies improved, expecting supply to improve quarter-over-quarter, and VYVANSE erosion to proceed as planned. Christophe Weber said in PDT, margin has been improving due to supply chain optimization, revenue growth using manufacturing capacity fully, stable donor fees, and subcu growth helping margin.

Q: About decision to end partnership with JCR for Hunter syndrome candidate JR-141 and deal with AC Immune for Alzheimer’s.

A: Andy Plump said the decision to end partnership with JCR was part of pipeline prioritization. On AC Immune deal, Andy Plump said active immunotherapy has potential for safer profile and earlier intervention to increase efficacy.

Q: About ENTYVIO and impact of SKYRIZI approval for UC; and about gross margin.

A: Julie Kim said ENTYVIO is still market share leader in first-line bio-naive for UC. Milano Furuta said gross margin in Q1 was 68%, expecting it to lower in remainder of year due to VYVANSE and AZILVA gross margin products shrinking and albumin revenue recovery.

Q: About R&D organization productivity and ENTYVIO biosimilar protection.

A: Andy Plump said R&D is prioritizing pipeline and leveraging data/tech for efficiency. Christophe Weber said ENTYVIO biosimilar entry in U.S. is expected no earlier than 2030-2032 based on patent set and development stage.

Q: About QDENGA performance and Q1 earnings progress excluding currency and VYVANSE.

A: Christophe Weber said QDENGA has strong demand but limited by supply capacity. Milano Furuta said Q1 progress was on track according to expectation, with VYVANSE generic erosion expected to return to projection and R&D expenses weighted to rest of year.

Q: About TAKHZYRO and immunoglobulin growth; and about TYK2 inhibitor uptake.

A: Julie Kim said TAKHZYRO and immunoglobulin growth due to new patient starts and market expansion. On TYK2 inhibitor, Julie Kim said TAK-279 has differentiated profile and will be positioned strongly if Phase III data bears out