TAK

Strategic Progress on Two-Horizon Roadmap

• The company delivered a solid Q1 start to FY26, with performance fully on track to meet full-year guidance, aligned with the two-horizon strategic roadmap.
• The enterprise transformation program is largely on track; implementation of the new international business unit structure is complete, bringing leadership closer to customers and patients to improve speed, simplicity, and efficiency, while generating cost savings to fund growth investments.
• A landmark new collaboration with the Indonesian government was announced to build local plasma operations, starting with new plasma donation centers and assessing future local manufacturing feasibility, to support growth of the Plasma-Derived Therapies (PDT) business.
• A Capital Markets Day is scheduled for December 11, 2026 in Tokyo, where management will share deep dives on pipeline progress and mid-to-long-term financial ambitions through the end of the decade.

Late-Stage Pipeline & Launch Milestones

• Orzaful (Oveporexin): First approval for narcolepsy type 1 (NT1) received in China; approval decisions are expected in Q2 FY26 in the U.S. and Japan, with launches planned for H2 2026 globally. New phase 3 data confirm transformative efficacy across all NT1 symptoms, including normalization of REM sleep latency and improvements in daily function and cognition.
• Rusvertide: First-in-class hepcidin mimetic for polycythemia vera, granted U.S. FDA priority review with an August PDUFA date and expected U.S. launch in H2 2026. Following Protagonist's opt-out of U.S. co-commercialization, Takeda now holds exclusive global development and commercialization rights.
• Zazacitinib: Best-in-class oral once-daily TYK2 inhibitor for psoriasis, on track for U.S. launch in H1 2027. Head-to-head phase 3 data vs. dupilumab showed statistical superiority across all primary and key secondary endpoints, with over 35% of patients achieving complete skin clearance (PASI 100) at week 16, including strong performance in hard-to-treat areas like the scalp, palms, and soles. Clinical trials are ongoing across multiple additional immune-mediated indications, including psoriatic arthritis, Crohn's disease, and ulcerative colitis.

Early & Mid-Stage Pipeline Progress

• In oncology: Phase 3 trials of Elriticept in anemia-associated myelodysplastic syndrome (MDS) have been initiated, and updated encouraging data for TAC 928 (PD-1 IL-2 alpha biased bispecific) was presented at ASCO, with a planned phase 3 trial in refractory non-small cell lung cancer (NSCLC) later this fiscal year. Arcotabatican (TAC921) has strong phase 3 progression-free survival data in third-line gastric cancer, with a Japanese filing planned for FY27.
• In neuroscience: TAC360, a next orexin agonist, is in phase 2 trials for narcolepsy type 2 and idiopathic hypersomnia, with a newly initiated phase 2 trial in NT1 to explore additional dose and dosing regimen options.

• Full year fiscal 2026 guidance is unchanged from the prior update in May, with Q1 performance fully on track to meet all full-year targets.
• The company reaffirmed its full-year adjusted free cash flow guidance of 650 to 750 billion yen.
• In Horizon 1 (the current transformation and investment phase), management maintains focus on returning to core revenue growth, protecting core operating profit, improving reported profit and return on equity, and sustaining strong adjusted free cash flow, which aligns with the planned transition to Horizon 2 (accelerated growth, structural margin expansion, and sustained value creation).

Total company revenue for Q1 FY26 was 1.22 trillion yen, up 10.2% on an actual foreign exchange basis and down 0.5% at constant exchange rates (CER). Core operating profit was 358.9 billion yen, up 11.5% on an actual FX basis and down 0.5% at CER. Reported operating profit was 201.4 billion yen, with 9.1% year-over-year growth on an actual FX basis. Core EPS was 154 yen, a decline of 11.8% at CER driven by a favorable tax position in the prior year.

• Core in-line brands: 58% of total revenue, grew 2.3% at CER, led by 4% CER growth for the company's largest product NTVO. Growth was partially offset by expected phasing impacts for immunoglobulin and alabamine in the U.S.
• New launches: 4% of total revenue, grew 22.6% at CER, supported by Frisacla, Livitensity, Azima, and Kyudenga.
• Mature/LOE portfolio: Contributed the remaining 38% of revenue, with expected continued decline driven by generic erosion of the U.S. vitamins portfolio that offset most growth from core and new launch segments at CER.

The only risk discussion in the call references that actual future results may differ materially from forward-looking statements, with key risk factors detailed in the company's latest Form 20-F and other SEC filings. No new operational risks, material competitive risks, or execution failures were discussed on the call.

Q: Q1 gross margin came in higher than expected, how much of this was from one-off divestiture gains, and what is the full year gross margin outlook? How will Orzaful be positioned clinically and priced globally for NT1?

A: The 140 bps year-over-year Q1 gross margin improvement was almost entirely driven by favorable FX on PDT product costs, not product mix or large one-time divestiture gains. The small one-time milestone cost reduction from completed technical evaluation will be negligible in Q2, and the full year gross margin guidance of ~65% from May remains unchanged. Orzaful is a first-in-class therapy that targets the underlying orexin deficiency in NT1, and is expected to replace existing standards of care as a monotherapy. Patient growth will first come from diagnosed NT1 patients already on existing treatment, with longer-term growth from improved NT1 diagnosis rates. Pricing will not be disclosed pre-launch, but will reflect appropriate value recognition for the drug's transformative efficacy.

Q: When will TAC360 phase 2 data be disclosed, why is TAC360 being studied in NT1 alongside Orzaful, and when will zazacitinib IBD data be released?

A: TAC360 is in adaptive design phase 2 trials for idiopathic hypersomnia and NT2, with no fixed end date for readouts, as the design allows for ongoing exploration of dose and once/twice daily dosing regimens. Trials are still in early stages, so no fixed disclosure date ahead of the December Capital Markets Day has been set. Zazacitinib data for ulcerative colitis and Crohn's disease is expected by the end of FY26, and the format for disclosure is still being finalized.

Q: What is the outlook for Entivio performance, and how will Rusvertide be priced relative to phlebotomy for polycythemia vera?

A: Entivio remains the leading prescribed brand for IBD, with strong global growth: 6.7% growth in Europe, 10% in Japan, and 36% in other intercontinental markets, driven by the growing self-injectable SubQ Pen formulation. The small Q1 U.S. sales decline is due to pricing mix and inventory adjustments, not weak demand, and full year guidance for Entivio remains on track. Rusvertide pricing will not be disclosed pre-launch, but will follow the company's standard approach of reflecting appropriate value recognition for the drug's clinical benefit.

Q: What is the status of launch preparation for Orzaful and Rusvertide, and what key operational KPIs is management tracking ahead of launch?

A: Pre-launch preparation is well advanced for both assets: For Orzaful in the U.S., medical science liaisons have been in the field for over a year conducting provider education, sales teams have mapped key sleep centers, payer engagement is complete, and specialty pharmacy and patient support programs are fully built out, pending FDA approval and DEA scheduling. For Orzaful in China, the approval came after the annual NRDL reimbursement window, so the company will focus on the private market until the 2027 NRDL submission. For Rusvertide, provider education, payer engagement, and launch activation are complete leveraging Takeda's existing hematology commercial infrastructure. Key post-launch KPIs will include total patient access, payer coverage rates, and patient source mix, but no 12-month coverage target was disclosed.