Takeda Pharmaceutical Company Limited Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Business Dynamics: FY '25 first half results tracking as planned; VYVANSE generic impact peaked in H1; launch product growth 5.3% at CER in H1, expected to accelerate in H2.
• Financials: H1 revenue ~JPY 2.2 trillion, down 6.9% or -3.9% at CER; core operating profit down 11.2% at actual FX; reported operating profit down 27.7% due to impairment losses; strong cash flow.
• Efficiency Program: Progressing with initiatives (organizational changes, real estate optimization, R&D efficiency); restructuring costs in H1 JPY 27.4 billion.
• Pipeline Updates: Oveporexton on track for US approval in narcolepsy type 1; mezagitamab shows promising 96-week results in IgA nephropathy; rusfertide received breakthrough therapy designation; zasocitinib Phase III data expected; partnership with Innovent Biologics to expand oncology pipeline with 3 differentiated assets.

Segment Performance

• VYVANSE: Last year of significant generic impact, peaked in H1 with lost revenue.
• ENTYVIO: Growing, pen growing 20% Q-to-Q in US but only 9% of volume; revised full-year growth to 6% at constant exchange rate (CER).
• PDT: Expected mid-single digit growth; IG growing high single digit, SCIG growing double digits; albumin had slight H1 decline but expected to accelerate in H2.
• Oncology: FRUZAQLA expanding with global launches.
• Vaccines: QDENGA affected by transactional FX due to euro appreciation vs Brazilian real.
• Launch Products: Over 50% of revenue, grew 5.3% at CER in H1, expected to accelerate in H2.

Guidance

• Revenue: Total revenue expected broadly flat vs prior year.
• Profit: Core operating profit and EPS guidance revised due to transactional FX headwind; adjusted free cash flow includes USD 1.2 billion payment for Innovent deal.
• ENTYVIO: Revised full-year growth to 6% at CER.
• Pipeline: Expecting three new product launches (rusfertide, oveporexton, zasocitinib) from FY '26 onwards.

Risks

• Transactional FX: Impact on revenue and profit, especially from euro appreciation affecting QDENGA.
• Competitive Pressures: Impact on ENTYVIO growth due to competitive landscape.
• Geopolitical Risks: Potential impact on partnerships like with Innovent Biologics.

Question and Answer

Q: Regarding the Innovent deal, how will R&D spending be managed and its impact on margins?

A: P.K. and Milano discussed cost splits, efficiency programs, and long-term margin improvement via top-line growth.

Q: About ENTYVIO Pen penetration, what actions are being taken to expand access?

A: Julie Kim mentioned working on coverage at various levels, including local tactical actions.

Q: On the Innovent partnership's IBI363, when is next data update expected?

A: P.K. stated they are monitoring data closely but didn't specify exact timing yet.

Q: About PDT margin update, what's the outlook?

A: Giles Platford mentioned continued margin improvement in FY '25 due to product mix, productivity, and efficiency efforts.

Q: On celiac disease programs, what's the ambition?

A: Andy Plump discussed ongoing Phase II studies for TAK-227 and TAK-101, highlighting unmet medical need in celiac disease.