Takeda Pharmaceutical Company Limited Q1 FY2025 earnings call

• Financial Results: Q1 revenue was just over JPY 1.1 trillion, a decrease of 8.4% or minus 3.7% at CER. Core operating profit was JPY 321.8 billion, down 15.8% at actual FX or 11.9% at CER. Reported operating profit was JPY 184.6 billion, up 11%. Core EPS and reported EPS were JPY 151 and JPY 79 respectively. Adjusted free cash flow was JPY 190.1 billion.
• Pipeline Progress: Positive Phase III results for oveporexton in narcolepsy type 1; both studies met primary and secondary endpoints. Phase III VERIFY study of rusfertide presented at ASCO. Initiated Phase III head-to-head trial for zasocitinib vs deucravacitinib and Phase III trial for elritercept in second-line anemia-associated myelodysplastic syndrome. Regional approvals included European approval of ADCETRIS in frontline Hodgkin lymphoma.
• Debt Management: Executed leverage-neutral bond issuances, repaid maturing debt, with average annual maturity of ~JPY 220 billion considered manageable based on cash flow outlook.

In Q1, Takeda's Growth and Launch Products, which represent 50% of revenue, grew 5% at constant exchange rates (CER). In Gastroenterology (GI), ENTYVIO grew 4.9% at CER, with active ENTYVIO PEN patients in the U.S. growing ~30% since the last quarter. In Rare Diseases, TAKHZYRO continues to grow as a market leader in HAE prophylaxis. The PDT portfolio had phasing impacts in Q1 but IG and albumin are anticipated to grow high single-digit for the full year. In Oncology, FRUZAQLA is expanding with global launches. Vaccines' QDENGA was impacted by shipment timing and currency effects but volume is increasing and expected to grow strongly. VYVANSE was significantly impacted by generic erosion, with the impact expected to moderate in future quarters and FY '25 being the last year of significant impact from VYVANSE erosion.

Takeda's FY '25 outlook remains unchanged. Q1 was significantly impacted by VYVANSE generic erosion but was within expectation. The full-year guidance is not changed, with revenue expected to be broadly flat overall.

• Potential impact of tariffs on U.S. imports, where the value of imports into the U.S. is ~8% to 10% of U.S. revenue, and tariffs could apply, but the company is well-positioned to manage the potential impact.

Q: About sales recovery of ENTYVIO, IG, VYVANSE, QDENGA in Q2 A: Christophe Weber mentioned that for ENTYVIO, the PEN is accelerating with increasing active patients in the U.S. and efforts to improve access; VYVANSE's impact is expected to wane as FY '25 is the last year of significant generic erosion; for IG, there's mid-single-digit overall PDT franchise growth with high single-digit for IG; QDENGA has increasing volume and is expected to grow strongly due to greater demand than supply.

Q: About the additional benefit of the new orexin molecule entering the pipeline A: Andrew Plump stated that orexin agonism is relevant for diseases in three categories: orexin deficiency (narcolepsy type 1), rare diseases with normal orexin levels, and common diseases with sleep-wake cycle disruptions. The new molecule will explore opportunities across these broader areas to address unmet medical needs