DAIICHI SANKYO Aktie

[Interpreted] Thank you for waiting. From now on, we would like to open Daiichi Sankyo's FY 2026 Second Quarter Earnings Call. And my name is Fujishiro, working as MC for today's session covering IL. First of all, about the languages of choice. In this session, we use both Japanese and English, so that you have a simultaneous translation service. [Operator Instructions]. Presentation decks are available to be downloaded on a corporate website, IR Library, earnings call related document.

And so today, we have 4 speakers, Representative Director, President and CEO, Okuzawa; and also Ken Keller, the Board Member, Global Oncology Business Head; and John Tsai, Global R&D Head; and also Kodama, CFO of the company. First of all, Okuzawa, Ken, John will give you the overview of the year performance and up until 7:00 PM will receive questions from investors and analysts.

[Operator Instructions] And this session is recorded. Please be aware of that. Let's get started. Mr. Okuzawa, the floor is yours now.

[Interpreted] This is Okuzawa. Thank you very much for participating in Daiichi Sankyo's Financial Results Presentation Meeting today. I will now walk you through our consolidated financial results for the second quarter of FY 2026, which were announced today at 1:00 p.m. following the presentation material.

Please turn to Slide 3. We will cover FY 2026 Q2 financial results, business update and R&D update in this order. Business update will be presented by Ken Keller, Head of Global Oncology Business and R&D update by John Tsai, Head of Global R&D. We will take your questions at the end of the session.

Please turn to Slide 4. Highlights of the second quarter. Strong growth in our flagship products ENHERTU and DATROWAY drove revenue past the JPY 1 trillion mark by the second quarter. Progress is on track toward achieving record high full year revenue.

Regarding operating profit, COGS ratio improved, and we are well on track toward a significant year-on-year increase in full year operating profit. Our consolidated forecast for FY 2026 remains unchanged from the forecast announced in July. For your reference, updated sales projections by product and unit are available in the supplementary materials. This slide provides an overview of our consolidated results for the second quarter of FY 2026.

Revenue increased by JPY 191.9 billion or 19.7% year-on-year, reaching JPY 1,167.2 billion, cost of sales increased by JPY 1.1 billion year-on-year. SG&A expenses increased by JPY 96.9 billion year-on-year. R&D expenses increased by JPY 23.2 billion year-on-year. As a result, core operating profit increased by JPY 70.6 billion or 46.9% year-on-year to JPY 221.3 billion. Regarding the CMO compensation fee included in the cost of sales although there was an increase resulting from a onetime payment we made to certain CMOs, foreign exchange adjustments and partial reversals of provisions recorded in FY 2025 for calendar years 2026 and 2027 resulted in JPY 16.7 billion decrease year-on-year, resulting in a total of JPY 4.3 billion.

The onetime payment to certain CMOs was made to resolve any future potential shortfall between our supply plan and minimum purchase applications, thereby eliminating future uncertainties and risks associated with these contracts in a manner consistent with economic rationality. In addition to the JPY 4.3 billion booked in the second quarter, as already informed in the full year projection, JPY 80 billion CMO compensation fee related to calendar year 2028 is expected to be booked in the third quarter or later this fiscal year. But because we also expect additional reversal of the provision booked last fiscal year, the total amount projected remains the same.

For details, please refer to Appendix Slide 26. Operating profit, which includes noncore income and expenses increased JPY 49.6 billion or 34.4% year-on-year to JPY 193.8 billion. Profit attributable to owners of the company rose by JPY 20.7 billion to 15.8% year-on-year to JPY 151.5 billion. Quarterly EPS increased by JPY 12.67 year-on-year to JPY 83.22. Foreign exchange rates reflected a weaker yen against both the dollar and the euro.

Slide 6, please. From here, I will explain the factors for increase and decrease year-on-year. Revenue grew by JPY 191.9 billion year-on-year. Here is the breakdown by business unit. First, Japan business unit achieved sales increases in anticancer agents, ENHERTU and DATROWAY and pain treatment, Tarlige, but antiepileptic, Vimpat saw generic entry and termination of the co-commercialization agreement. Antiplatelet agent, Effient, also saw generic entry. And oral anticoagulant, Lixiana, was affected by NHI drug price revision. This resulted in Japan business revenue decrease of JPY 8.3 billion.

Next, our overseas business units, excluding the foreign impact here. In the oncology business, driven by strong growth of ENHERTU and DATROWAY, revenue increased by JPY 114.3 billion. In the American region, iron deficiency anemia therapies, Venofer and Injectafer and generic injectables sales decreased, resulting in JPY 25.4 billion revenue decrease. In the EU specialty business, growth of cholesterol-lowering agents, NILEMDO and NUSTENDI was offset by a decline in Lixiana resulting in JPY 800 million revenue decrease.

In the ASCA business, Asia, South and Central America, led by growth in ENHERTU, notably in Brazil, revenue increased by JPY 11.5 billion. In the upfront payment and regulatory sales milestone related to alliance with AstraZeneca and U.S. Merck, Regulatory milestones were recognized for ENHERTU approvals in the U.S. for HER2-positive breast cancer neoadjuvant adjuvant treatment and in Europe for first-line treatment resulting in JPY 26.6 billion revenue increase. The positive impact of foreign exchange on total revenue was JPY 73.9 billion.

Slide 7 shows operating profit factors for change. As mentioned, the breakdown of the JPY 49.6 billion will be shown, and revenue grew by JPY 191.9 billion. Regarding cost of sales and expenses in cost of sales, due to revenue growth, other cost of sales increased by JPY 17.7 billion. On the other hand, due to a decrease in CMO compensation fee, the overall increase in cost of sales was limited to JPY 1.1 billion. SG&A expenses increased, reflecting the increase in profit share with AstraZeneca by JPY 96.9 billion.

Regarding R&D expenses, due to weaker yen and increases in R&D investments associated with development progress for 5 DXd ADCs and NextWave R&D expenses increased by JPY 23.2 billion. Noncore income and expenses, mainly due to EU specialty business unit restructuring and impairment loss on paclitaxel increased by JPY 21 billion.

Next, Slide 8 explains changes in profit attributable to owners of the company. Operating profit increased by JPY 49.6 billion as explained. Financial income expenses, mainly due to the deterioration in foreign exchange gains and losses were affected by JPY 20 billion. Income taxes, reflecting higher profit before tax increased by JPY 7.4 billion. Following the partial share transfer of Daiichi Sankyo Healthcare in July this year, profit attributable to noncontrolling interests has been recognized starting this quarter. Consequently, profit attributable to owners of the company increased by JPY 20.7 billion year-on-year to JPY 151.1 billion.

Slide 9, on July 31, 2026, we submitted partial corrections to our FY 2025 financial results to the Tokyo Stock Exchange. We take this matter very seriously, recognizing the significance to the reliability of our financial reporting. The issue stemmed from errors in data aggregation processes, and we recognize that no structural issues were found that would compromise the effectiveness of the overall internal control system. Meanwhile, as recent business growth and globalization have made our organization and operational processes more complex.

The Board of Directors is not viewing this as an isolated event, but is discussing how to identify and oversee financial reporting risks in a timely and appropriate manner going forward. We are committed to enhancing the accuracy and reliability of our financial disclosures by regularly evaluating and monitoring both the internal control system itself and the effectiveness of the strengthened operational processes.

Next, I will review the progress of our operational excellence program. This initiative is an enterprise-wise transformation program designed to achieve our 2035 vision and the sixth medium-term business plan by focusing on strategic prioritization and resource allocation to fundamentally strengthen our profitability, competitiveness and organizational capabilities. This program consists of external expense optimization, process transformation through AI and structural transformation. External expense optimization is optimizing procurement processes based on unified data from our global ERP.

Business process transformation through AI is developing multiple concrete use cases. Structural transformation is simplifying our organizational and business operating model. We are advancing the identification of high-impact areas and measures for profitability and are now in the pace of developing and executing detailed plans for each initiative. Through these efforts, we will create capacity to invest in DXd ADCs subsequent BGTs, AI and other priorities while securing the midterm plans profit trajectory by delivering the JPY 200 billion cost optimization committed at the plan's announcement.

Internally, we have targeted benefits exceeding JPY 200 billion over 5 years, and any surplus will be reviewed for cash allocation based on comprehensive reviews of our financial standing.

I will now hand over to Ken Keller, Head of Global Oncology Business, for the business update.

Thank you, Okuzawa-san. Hello. This is Ken Keller, I'm Head of the Global Oncology Business Unit. I'll provide an update on business performance beginning with ENHERTU.

Next slide, please. ENHERTU delivered another quarter of outstanding performance. Global product sales reached JPY 464.5 billion, an increase of 45.9% year-over-year or JPY 146.1 billion. This performance demonstrates the strength of ENHERTU today and the scale of the opportunity still ahead. Growth in the second quarter comes from 3 clear drivers.

First, deeper penetration in existing indications; second, expansion into new indications; and third, broader access for patients around the world. Importantly, this growth is broad-based. The U.S. region led with 55% year-over-year growth, followed by our ASCA region at 49%, Japan at 37% and Europe at 26%. In the U.S., we have launched 3 important new indications this year. In January, we launched the first line HER2-positive metastatic breast cancer indication, and this is based on DESTINY-Breast09.

I'm happy to report the adoption has been impressive. ENHERTU has already become the market share leader and the new standard of care, and we expect adoption to continue as physicians gain experience with this regimen. This indication has also recently been approved in China, Japan and Europe. Based on the strength of the U.S. launch, we see a substantial opportunity, and we expect to replicate that success globally.

Equally important is our progress in early-stage breast cancer, bringing ENHERTU into the early-stage curative setting has always been our goal. Since our first approval in late-stage advanced setting, we felt ENHERTU's greatest and biggest impact would be in the early treatment setting where cure was still possible. It is gratifying to us and the entire oncology community to now have launched ENHERTU in both the neoadjuvant and the adjuvant settings based on DESTINY-Breast11 and DESTINY-Breast05 in the United States. I am pleased to share with you that ENHERTU's adoption is increasing month after month in both settings.

Based on the early adoption and the feedback from oncologists, we are confident that ENHERTU will soon become the market share leader and establish itself as the new standard of care in both settings. As I stated, these are potentially curative settings, which makes this expansion and our progress, especially meaningful both for patients and for the long-term growth profile of ENHERTU. We are also making progress in expanding access. Following extensive negotiations, I'm happy to report that ENHERTU has achieved public reimbursement in the United Kingdom for HER2 low metastatic breast cancer after chemotherapy.

This provides access to approximately 1,000 patients who have been waiting for a new treatment option. ENHERTU has already transformed the treatment of HER2-positive metastatic breast cancer. As ENHERTU moves into earlier stages of disease and reaches patients globally, we believe its clinical impact and commercial potential will become even greater. ENHERTU's overall Q2 picture is one of accelerating growth as its addressable market continues to expand, and there is significant headroom. ENHERTU is nowhere close to the limits of its opportunity.

Next slide. Now I'll turn to an update on DATROWAY's performance. DATROWAY is rapidly emerging as our next major growth driver. Q2 global product sales reached JPY 48.3 billion, an increase of JPY 32.6 billion year-over-year. Growth accelerated sequentially during the quarter, and we expect continued momentum throughout the second half of this fiscal year. In the U.S., market share continues to expand in the EGFR-mutated non-small cell lung cancer setting. As physicians gain experience with DATROWAY and their confidence in its clinical profile grows, we expect substantial growth in the coming years.

Importantly, the experience gained from prescribing DATROWAY in this lung cancer indication will serve as a strong foundation as we're ready for the top line results of multiple lung cancer trials in fiscal 2027. Our May launch in the first-line PD-L1 inhibitor ineligible metastatic triple-negative breast cancer setting is progressing very well. Market penetration and new patient starts are increasing every month. Physicians are highlighting 3 important attributes in their treatment decisions. First, it's DATROWAY's unique overall survival benefit, it's doubling of overall response rate and its convenient dosing.

At last week's ESMO meeting, we also presented new data on DATROWAY's CNS activity in triple-negative breast cancer based from our TROPION-Breast02 trial. This is important because up to 1/3 of patients with triple-negative breast cancer, eventually develop brain metastasis, an area where there is significant unmet need and very limited treatment options. These data showcased the CNS efficacy of DATROWAY in triple-negative breast cancer patients with baseline brain metastasis.

The trial demonstrated that DATROWAY significantly improved progression-free survival, response rates, and CNS disease control compared to investigator's choice of chemotherapy. The median CNS progression free survival reached 9.5 months with DATROWAY compared to 2.6 months with chemotherapy. This data underscores the potential of DATROWAY as a first-line treatment option for triple-negative breast cancer patients. Now I attended ESMO and the physician feedback on these data was highly encouraging.

Based on that feedback, we believe these findings further strengthen DATROWAY's clinical profile and will inform and strongly influence future treatment decisions. DATROWAY's global expansion is also accelerating. It was approved in Japan on September 16 for first-line metastatic triple-negative breast cancer. It achieved public reimbursement in Germany for first-line triple-negative breast cancer, supporting European growth. And it was launched in Brazil in August.

DATROWAY now has multiple growth engines, increasing U.S. adoption, expansion into additional indications, new clinical evidence and a growing global footprint. DATROWAY is becoming an increasingly important contributor to our oncology growth with substantial potential still to be unlocked. This foundation will position DATROWAY strongly for its upcoming clinical data catalysts expected in fiscal '27.

Next slide, please. Now I'd like to talk about the recent collaboration with Summit. Our collaboration with Summit Therapeutics is a strategically important step in maximizing the potential of DATROWAY. Together with AstraZeneca, we will evaluate DATROWAY in combination with ivonescimab across multiple tumor types, including lung cancer and breast cancers. The collaboration will begin with a Phase III study in first-line triple-negative breast cancer. Our ambition is to establish DATROWAY as a backbone of treatment across multiple cancers and combinations will be an important part of achieving that ambition.

DATROWAY brings a TROP2 directed DXd-ADC together with ivonescimab's dual targeting of PD-1 and VEGF. This gives us an opportunity to investigate this differentiated treatment regimen across multiple tumor types. We believe the next era of oncology will be defined not only by better individual medicines, but increasingly by the right combinations for the right patients. This collaboration is an example of how we intend to move with speed, use external innovation and strategically work with partners to maximize the value of our pipeline.

Next slide. Daiichi Sankyo has built world-class science. We must now ensure that our commercialization capabilities are equally world-class. Our portfolio is entering a new phase. We will have more indications, more markets and more launches to manage. We will have more than 20 registrational trials expected to be read out over the next several years. Together with a significant number of early-stage assets advancing through our pipeline. At the same time, the pharmaceutical environment is increasingly interconnected, a pricing or access decision in one market can influence value in many others.

This creates an unprecedented opportunity to bring more medicines to more patients. It also significantly increases the value at stake. To capture this opportunity, our commercial model will evolve. Effective April 2027, we will operate as one global commercialization organization, bringing our regional businesses and our global commercial functions together under one unified accountability. This change will support faster and better decisions, more efficient resource allocation, it will elevate launch readiness and allow us to build better capabilities to deliver more consistent world-class execution across markets. It will also strengthen collaboration internally between commercial, R&D and our technology unit.

In the new commercialization organization, our responsibility and commitment is to convert our expanding pipeline into sustainable, global revenue and operating growth, delivering greater value for patients, Daiichi Sankyo and our shareholders, all with a singular goal of ensuring our medicines reach the right patient at the right time, every time across the globe.

I'll now turn it over to John Tsai, our Head of Research and Development.

Thanks, Ken. This is John Tsai, and I'm going to give you the updates from R&D over the last quarter.

Next slide, please. We start with the results of DESTINY-Lung04 where we released these results at the World Congress of Lung Cancer in early September. In this study, ENHERTU versus standard of care, which is platinum pemetrexed doublet plus pembro demonstrated a statistically significant improvement in progression-free survival with a hazard ratio of 0.63. This is in first-line patients with advanced HER2 mutated non-small cell lung cancer, and the results represented a 6-month improvement in medium progression-free survival.

In the primary analysis, ENHERTU monotherapy reduced the risk of disease progression by 37% and a medium progression-free survival of 14.3 months versus 8.3 months for the platinum pemetrexed doublet with pembro. The results were demonstrated and consistent across subgroups, including prespecified subgroups in patients with brain metastases, smoking status and HER2-mutated status. At the time of the analysis, the overall survival was less than 50% mature. While there was no observed overall survival benefit at this early time point, the OS also did not favor ENHERTU, but we did see greater use of HER2 therapies in the control arm.

Next slide, please. I'd like to give you some regulatory updates for ENHERTU. First, for DESTINY-Breast09 in the first-line HER2 mutated metastatic breast cancer setting with ENHERTU plus pertuzumab, which demonstrated a decreased risk of disease progression or death by 44%. This was approved in China in August. And in September, we received the approvals in Japan and the EU.

Next, in DESTINY-Breast05, which is in the HER2-positive early breast cancer adjuvant setting, which demonstrated a reduced risk of invasive disease or death by 53%, this was approved in China and EU in October. Lastly, for ENHERTU in the HER2 pan-tumor solid tumors, this was approved in China and also in October, and this was based on 4 Phase II trials across a broad range of solid tumors. With that approval in China, that equates to 10 indications for ENHERTU in China.

Next slide, please. Now I'd like to go over the updates for DATROWAY. For DATROWAY and TROPION-Breast02, which is in the first-line metastatic or unresectable triple-negative breast cancer setting, this was approved in the U.S. in May of 2026. Following that, we received approval in the EU in July, approval in Japan in September and in China in October of this year. For TROPION-Urothelial04, which is in high-risk muscle-invasive urothelial cancer, we started the study, and the first subject was dosed in August of this year.

Moving on to I-DXd. We voluntarily withdrew the filing for the accelerated approval of I-DXd in extensive stage small cell lung cancer in September. This was based on discussions with the FDA, where the data from our Phase II ID8-01 study did not support an accelerated filing in discussions with the FDA. We continue to enroll patients in ID8-02, our Phase III trial and the enrollment of this study is nearly complete.

Next slide, please. Here, I'd like to share some additional data for R-DXd, which was shown at ESMO just this past week. This is an update of REJOICE-Ovarian01, the Phase II/III trial. And the results shared here is from all patients treated in the Phase II dose optimization study of the REJOICE-Ovarian01. This is data that has longer follow-up than what we've seen before. And the results demonstrated further improvement in duration response, progression-free survival and patient reported outcomes. We also demonstrated efficacy in patients with CDH6 greater than 1% biomarker.

Based on this, we're moving forward with the 5.6 milligrams per kilogram, and these results demonstrated an overall confirmed overall response rate of 49.7% and a median progression-free survival of 7.9%, with a balanced safety profile of 5.8% low-grade ILDs. To note, there were no grade 5 ILDs at this dose.

Next slide, please. We continue to advance our DXd-ADC platform in the ovarian cancer space. You can see here that ENHERTU continues to advance in the HER2+ first-line maintenance study in DESTINY-Ovarian01. In addition to REJOICE-Ovarian01, we also are advancing REJOICE-Ovarian04 in the platinum-sensitive ovarian cancer second-line space, we're advancing REJOICE-Ovarian04 in the platinum-resistant ovarian cancer space in the first-line maintenance setting and also REJOICE-Ovarian05 in the platinum-sensitive ovarian cancer, second-line induction and maintenance patients who are PARP progressors. These are our advancements in just the ovarian cancer space.

Go to the next slide, please. For the news flow in 2026, the majority of these data readouts remain the same. There is one change, which is highlighted in blue here. That is the change in AVANZAR, which we'll report out in calendar year first half 2027. And specifically, it will be in the first quarter of 2027 calendar year. One last thing before I conclude my remarks, I'm proud to say that we received the International Prix Galien Award for ENHERTU as the best technology product, and this is an award that's given out every 2 years by the Galien Foundation. This is the second award granted to ENHERTU following receipt of the National Prix Galian USA Award for Best Technology product in 2024.

We're very proud to receive this honor, and this was received yesterday. With those, I conclude my remarks.

Go to the next slide, please.

[Interpreted] Slide 23 shows the upcoming IR event. On November 25, Japan Time, we will host the sustainability meeting. Additionally, we plan to hold an R&D-focused IR event within FY 2026. Details will be announced as soon as they are finalized.

We will now move on to the questions-and-answer session.[Operator Instructions] We will move on to the first question. Citigroup Securities, Mr. Yamaguchi.

[Interpreted] My name is Yamaguchi. The first question I have is directly to Ken-san. And DATROWAY TMBC in that indication, it's doing well. And so then PD-L1. No question about that. Your competitor product got the indication. And so DATROWAY is limited to PD-L1 ineligible. And till there would be is easier to use given this? Is it impactful to the performance or not impactful? And so this is about minute detail. I'm sorry about that. This is my first question.

Thank you very much for the question. So in the United States, when we look at DATROWAY and the triple-negative breast cancer indication, the real drivers of choice today are overall survival, overall response rate, ease of use and then another factor that comes in there is comfort with the drug and habit. And so in the United States, our competitor was launched before we were. And so today, physicians are gaining experience with DATROWAY in our new indication.

And I can say the feedback is very positive. And so specifically your question about is the broader indication or the lack of it making an impact, very much at all. It's more about the comfort of physicians who have been using that competitive product. Now they're trying DATROWAY. And I think as they try, you'll see adoption accelerating even further from here.

[Interpreted] The second question to Kodama-san and the CMO payment compensation and that was explained previously, up to Q2 and the full year result, like those are not changed and they still are changed. And up to Q2, what is going on and to JPY 80 billion plus or minus for the full year, like a long-term expectation is something I would like to ask you.

[Interpreted] Thank you for the question. And the CMO compensation, and in Q2, so the status. And also for the full year, JPY 80 billion was announced, whether those numbers stay the same or not that be the question. And so Slide #26 probably. And Okuzawa already explained. And in FY 2025 -- or if calendar year '26 and '27, we have reserves. And so we have ForEx at play, and it fluctuates because of that. And so that at the end of the fiscal year, you might have a negative impact due to stronger yen.

On the other hand, part of CMOs in the future, so we are making lump-sum payment for the future cancellation and so that we are getting additional amount, but in calendar year 2028, in terms of the reserve, and that is expected to be JPY 80 billion and no change to that number for the time being, and our original assumption was negotiation and that is in progress. And so we are managing the situation.

And one additional information is ForEx. And because of the fluctuation, the amount might come up or come down.

Next question, UBS Securities, Mr. Sakai, please.

[Interpreted] This is Sakai from UBS Securities. And this CMO compensation fee, I have additional question to Kodama-san. I-DXd, withdrawing of the application submission. This means that the supply necessary will become less. And looking at FY -- calendar year '28, no change you said just now, which means because this is a not big indication, not affected -- not affecting JPY 80 billion. Is this the right way to look at it? And then in the balance sheet, inventory is increasing. Is this commercial inventory what kind of inventory? I think we had booked for that in the past, but can you explain further?

[Interpreted] Thank you very much for your question. Two questions. One with CMO compensation, ID8 withdrawal of the submission impact, plus the other is inventory increase of about JPY 100 billion. You were asking about this content. And now CMO compensation fee. Impact by I-DXd -- and as you are right, I-DXd, yes, the impact is not that big from I-DXd. And in the future, we will be expanding our applications. We are conducting various studies to broaden our applications considering this aspect, what we had already prepared for, the timing of starting to use what we pared for will be a bit later, but we do not expect any significant or meaningful impact right now.

And the second question was about inventory. Yes, you're right. R&D related and clinical tire-related inventory, they were expensed when they took place and the increase in the inventory is basically the commercial inventory. And as we may have explained a number of times for DXd ADCs, the manufacturing period is quite long, and we are preparing for future sales. And we are manufacturing for future sales, the DXd ADCs. And because we are seeing ENHERTU sales expansion, we are preparing inventory a bit beforehand, that is why you are seeing a start of inventory increase.

[Interpreted] I see. And then my second question is for John-san. Do the existing DATROWAY data such as immunotherapy like in long-term PFS tail? I mean -- because we're wondering like in AVANZAR delayed readout reflect a slower event occur beyond the medium with the median PFS largely unchanged. With Weibo model with a declining hazard over time, be a reasonable assumption here?

Thanks for your question. It's very helpful. We're eagerly awaiting the results of the AVANZAR just like everyone else. Given that the study continues to be blinded, we don't have the insights specifically around AVANZAR and the curves. I think once the results are available, we will have much better insights. I'm sorry that I don't have the details, but we don't -- because the study is currently blinded. We don't have any insights on what those curves look like. So as soon as we have those, we'll be glad to share them. Thank you.

[Interpreted] The next question is from JPMorgan Securities, Mr. Wakao.

[Interpreted] JPMorgan, Wakao speaking. I have a question to John. AVANZAR, the readout is delayed so that the event accumulation is getting delayed. On the other hand, AVANZAR clinical study protocol in that version 3 and after event occurrence has not been changed in the protocol, is that right understanding? And so the previous change was at the introduction of QES. Is my understanding correct?

Yes. I'm happy to give you some insights about the AVANZAR. As you know, AVANZAR is designed to evaluate both the non-squamous intention to treat unselected population and the biomarker positive population. This is designed to have co-primary endpoints for both PFS and OS. And because OS is an important endpoint for first-line non-small cell lung cancer patients for approval for regulatory agencies around the world, we included OS as one of the co-primary endpoints. The primary endpoint analysis for PFS is timed so that we should have sufficient maturity to characterize the overall OS trends.

And we have not conducted any PFS interims in this trial. This is an exception to the rule of disclosure of interims. We usually do not discuss interim results. But in this specific situation, we're sharing that we did not conduct any interims in this study. These are some of the insights that I can share regarding the way that we've looked at and evaluate AVANZAR from a study standpoint.

[Interpreted] No change to the event rate, and so I understand you are not conducting interim, but the event occurrence rate, what is going on there? Your assumption hasn't been changed?

That's correct. We have not made any event assumption changes. We continue to advance the study as we originally intended.

[Interpreted] The second point, Dato lung cancer and AVANZAR PFS accumulation is lagging behind. And so PL-07, probably it might happen in that study. But as of now, for the data readout is expected in FY 2027, and so in the study in assumption, of course, there might be a range, but it is lagging behind a little. And so PL-07, if there isn't any delay then our clinical trial design issue was there or the population or a regimen issue. Can you give me some kind of hint why that is the case?

Thank you for your question. I'll reinforce that the primary endpoint analysis for AVANZAR is for progression-free survival, PFS. That should allow us to have sufficient maturity to characterize the overall OS trends. So in that respect, that's how we've powered AVANZAR. For PL-07, we continue to progress as we've always intended, and there's been no changes in the design. So overall, we continue to have those time lines with a slight delay in AVANZAR.

[Interpreted] Next is Morgan Stanley MUFJ Securities, Mr. Muraoka, please.

[Interpreted] This is Morgan Stanley, Muraoka speaking. First, I want to ask Kodama-san. This time, the second quarter results was very good. At the time of the first quarter, without noise, your fundamental business result was great. My question is, what should we expect for the third quarter? I want to confirm what you expect for the third quarter? I know that you don't have quarterly based guidance, but there is this JPY 80 billion payment. This could take place both over third quarter or fourth quarter and maybe fourth quarter portion may be bigger. And the usual pattern is that in the third quarter, you would say that profit has already topped the full year forecast.

And the fourth quarter would be a bigger core OP loss and end the year, not as big of OP loss than usual years, but is this how I should imagine the year to go?

[Interpreted] That is pretty difficult question to answer. The question was what to expect in the third quarter and fourth quarter. And when we divide between third and fourth quarter, what is the picture of the PL to expect the split between third and fourth quarter. This is how I understood your question. And as Muraoka-san said, the past pattern of Daiichi Sankyo PL is when we look back in the fourth quarter, we were weak, both in revenue and with the impact of NHI price revision in Japan, and there is also inventory adjustment. We had the seasonability and COGS, inventory disposal loss and valuation loss were usually determined in the fourth quarter.

Expenses wise, in the fourth quarter, expenses were heavy in the fourth quarter. And this trend, I think, does continue to apply this year too, but will this mean a loss? I wonder, but comparing between third quarter and fourth quarter, in the third quarter, we booked bigger profits and weaker profit in the fourth quarter. This is the trend we also expect at the end of the year, at the end of the calendar year, like Christmas and beginning of the New Year, what is going to be the inventory adjustment, some years earlier. And in other years later, it is a bit difficult to control. But for expenses from the third quarter to the fourth quarter, expenses are expected to increase. This is my expectation.

[Interpreted] Then the JPY 80 billion, this will be heavy in the fourth quarter. Is that right rather than third quarter?

[Interpreted] As of now, more heavy as a matter of probability in the fourth quarter, but the key is to the CMOs, the 2028 manufacturing plan. What is the agreement timing of 2028 manufacturing with the CMOs. From the calendar year end to the beginning of the new calendar year, the agreements will take place. And how we discuss with the CMOs will be a factor. But what we expect now is more towards the fourth quarter.

[Interpreted] And I have one further question. That is for John Tsai-san. This time, AVANZAR will become next calendar year first half according to AstraZeneca disclosure, TLO7, AstraZeneca's disclosure-wise, also calendar year first half, no change which means AVANZAR and TLO7, both almost the same timing, I'm wondering. Is this the right timing gap? First half of the year means both will be -- possibly be submitted together to ASCO. Is this the expectation and the current scheduling? Can you give me more color?

Sure. Thank you for your question. As you correctly stated, the results for AVANZAR will be in the first quarter calendar year of 2027, and AVANZAR will be around the same time. It will be in the first half calendar year of 2027. So they are timed very closely together. We have not looked at the specific timing for submissions to various congresses, but we will be very prompt in sharing these results out of major congress. We've not decided which congress to share this with. But as soon as the data is available, we will be sharing it at an upcoming congress. So we will not delay. Thank you.

[Interpreted] Next question is Tony Ren, Macquarie, please.

Okay. Perfect. Yes, a couple of questions to John. So the first one is about the CNS activity of your DXd platform. It -- I was at ESMO as well. And it appears to me that one of your competitors, a leading competitor, they refused to recruit any patients with CNS disease into their studies. And I think that's your big differentiator. What -- so John, could you explain to me how do you think about what makes 1 topoisomerase, 1 ADC to have CNS activity, whereas another one doesn't. So that's my first question.

Yes. Thank you for your question. As you correctly stated, we released results at ESMO of both the CNS activity for ENHERTU as well as for DATROWAY, and we've seen very good activity for our DXd ADCs for CNS activity, particularly those patients who had brain metastases. Specific to your biologic question, of understanding exactly why this works and what happens with competitors. Certainly, we don't comment about why competitors actually have excluded patients from their trial. But we are very happy with the results that we've seen in the CNS activity.

We don't know if this is a bystander effect or what we've seen is that the DXd ADCs have very strong effects in terms of the results that we've seen when you actually are approaching the monoclonal antibody, whether these are around TROP2 patients for DATROWAY or HER2 patients because we do know that there's HER2 receptors and TROP2 receptors in various organs throughout the body. So as we've seen these results, we do see this activity, and it is a differentiated activity for our DXd ADCs. Thank you.

The second question is about ovarian cancer. So you obviously are going with [ KATHERINE-6 ] approach, right? And we also see some news announcements at ESMO without data, just top line news about folate receptor alpha. How do you think about these 2 somewhat overlapping sub-patient populations in ovarian cancer?

Yes. The ovarian cancer space, as you noted, has seen really good results, and this is great for patients, both with folate receptor alpha targeted agents as well as for CDH6 ADCs. We've seen very good results with CDH6. They are differentiated in terms of the results. I think we will find out more as patients begin to see the responses from these 2 different classes of agents. I'll also note that there are differences in the AE profiles. And I believe this is going to be also another point of differentiation. But I do think that there will be further classification and understanding of ovarian cancer across these different groups and different classes of agents. Thank you.

Do you think one class would be positioned ahead of another?

I think that's to be determined. But as I said, perhaps there may be differences in the AE profile and familiarity of the oncologist of which agents they would choose in terms of treatment.

[Interpreted] Next is from Daiwa Securities, Mr. Hashiguchi, please.

[Interpreted] This is Hashiguchi from Daiwa Securities. My first question is for John-san. I-DXd, why did you withdraw the submission or application? And with this, the speed of the development compared to GSK with dizziness, would be the same or a bit behind? I'm wondering. And considering the situation, the competitive environment -- how do you view the competitive environment? I-DXd's expected differentiation, could you also explain what is the differentiation for TROP2, for example, compared with competition? Safety profile is clearly different.

And the plan -- and is reflected in the clinical trial plans. But for I-DXd, you are conducting similar trials, whether competitors in the conventions, ILD is less, they are emphasizing very loudly. As Daiichi Sankyo, what are the strengths? What are the attraction that you can emphasize? Please explain to me.

Sure. Thank you for your question. For I-DXd, as you asked around the withdrawal of the accelerated approval approach. You also noted that the competition has advanced very quickly. In light of the benefit risk and the discussions that we've had with the FDA, the FDA wanted us to continue with our Phase III program, which is almost completed for enrollment. Based on those discussions, we decided to withdraw the I-DXd approach for accelerated approval, and we're advancing with the full Phase III program. That's why we've decided to actually continue given that we're almost fully recruited for the I-DXd Phase III program.

In terms of the differentiation, I think it really comes down to efficacy and also looking at differentiation versus the safety profile. The current advances that were demonstrated at ESMO, not everyone can tolerate the bispecific that's currently out in the market. So as we move forward, we have a number of programs for I-DXd, and we continue to advance them with excitement moving forward.

You did ask a question on differentiation for TROP2. I didn't know if you were referring to the non-small cell lung cancer space versus small cell lung cancer space. For the small cell lung cancer space, we are obviously continuing to advance with I-DXd. We also have next steps of combination of gocatomig, which is our DLL3 plus I-DXd for the B7-H3 approach in the first-line small cell lung cancer space. That's how we're differentiating. So referring to TROP2 for non-small cell lung cancer, and you asked about differentiation.

And the way that we're differentiated there is we have a number of global non-small cell lung cancer first-line studies that we'll be reading out. And I did refer to those earlier, the AVANZAR trial that will be coming out in the first quarter of next year, TROPION-Lung07, which is in the PD-L1 less than 50%. In the TROPION-Lung08, greater than 50%. We also have PD-L1 across the board for EGFR mutated population, which is TROPION-Lung14 and in the second-line EGFR-mutated patient, which is TROPION-Lung15. That's 5 global trials in the non-small cell lung cancer space in the TROP2 biomarker, and that's the most extensive first-line non-small cell lung cancer program that's been conducted by any company. So that's how we're differentiating between both small cell lung cancer and non-small cell lung cancer. Thank you.

[Interpreted] My second question is for Kodama-san. The loss compensation to CMOs. In the first half, there was a reversal to the provision. And in the second half, also, according to the Slide 26 image drawing, about JPY 10 billion in reversal. This scale of reversal seems to be expected. For what reason is this reversal occurring. ENHERTU and DATROWAY sales being strong. And as a result, you are producing more. Is this the right simple understanding for the reversal? Or is there another reason?

And 2028 onwards, the compensation be. Basically, there will be some acceleration delays in the clinical studies. But rather than that, the bigger impact may be more bigger volume like ENHERTU's sales volume that may have bigger sales impact in the short term, in my view. Is this understanding correct?

[Interpreted] Thank you for your questions. CMO compensation fee. One is this Q2 reversal reason and then the future reasons are 4 changes 2028 onwards. This is how I understand. The first question, Q2 reversal. There are 2 components. The first component is foreign exchange fluctuation. This is a bigger component. And the other component is the change in the provision itself. That is what has become fixed so far. In the provisioning, we look at the manufacturing plan and sales to a third party. Once things become visible, we provision but situations become different and more certain. And what is already determined will be changing. And there are some changes in the estimates.

These were the factors for changes in the provision or reversals in the provision. And what about in the future? Yes, as you say, the commercial production part, what is going to be the production volume is the big part. But in addition, the clinical trials. Also, there will be CMO production volumes may be affected. Therefore, the progress of the clinical trials will affect the CMO compensation fee provisions. And before launches, we start production a few years in advance. And if there are changes in the manufacturing plan, the manufacturing volume will change, which means clinical trial situation and progress does affect pretty much.

And whether the future new products move ahead in development and move on to the clinical trial stage will also be a bearing factor. I hope this answered your question.

And excuse me, just one point earlier, Muraoka-san asked about the split between third quarter and fourth quarter and the balance between the 2 quarters. One thing I forgot to mention is the following. That is, as you may already know and may be obvious, I may not need to state, but ENHERTU sales milestone that is time to be booked in the fourth quarter. This time more than JPY 90 billion we expect. This part between the third versus fourth quarter will be the big fourth quarter factor to be booked in. Sorry, I forgot to mention this earlier. This point I wanted to add. Thank you.

[Interpreted] The next question, Bernstein, Mr. Sogi.

I have a couple of questions to John. So John, you briefly mentioned that the OS is a co-primary endpoint for AVANZAR. And I actually thought that it was a dual endpoint rather than a co-primary. And I thought that if AVANZAR hit positive for QC's positive PFS, that should actually secure the technical success of the trial. So it would be great if you can elaborate on that. And also, I have a similar question about TL07. TL07 has more arms experimental are on triplet, doublet and also, of course, it's looking at ITT and QCs population for PFS and OS. It seems that it's quite a lot of the primary endpoints. I'm wondering how the design manages alpha location.

Yes. Thanks. So specifically on your question around the dual primary endpoint versus the co-primary endpoint, if in either situation where we reach the PFS or the OS, that would be considered statistically significant and positive for us. So whether you want to call that the co-primary endpoint or dual primary endpoints. In either case, whether that would be in the -- whether that would be PFS or OS, those would be considered positive.

On the TROPION-Lung07 in terms of the powering, we don't comment on the alpha and powering for these studies, unfortunately. So for us, while we've conducted the 3 arms, as you outlined, we continue to move forward with these studies, and we do think that we have robust patients recruited and sufficient powering for our endpoints.

Great. So one more question. This is regarding your collaboration with Summit for a combination with ivonescimab. So you have already included the non-small cell -- or the lung cancer is one area for a potential combination for DATROWAY. And so first of all, so are you -- is it reasonable to assume that you're waiting for AVANZAR and/or the TL07 data to come out to make a decision? And also, how do you think about ivonescimab is the preferred efficacy in squamous rather than nonsquamous in which the DATROWAY has been developed for non-small cell lung cancer?

Yes. Thanks for your question. As you know, we've seen a lot of positive data in the PD-1, PD-L1 bispecifics. And those have demonstrated really good results. Many of those results are in the Chinese population versus the Western population. We're having really good discussions on advancing these programs, both in breast cancer, also in lung cancer and other tumor types. Whether we will wait for these results before moving forward. These studies are in the design phase. And as we move forward, obviously, the results that we get from our studies will help guide us on how to further improve the approach that we take for all of these studies.

So currently, we're advancing in these discussions and collaborations and the design. As the results become available, we will certainly leverage the insights to improve the overall strategy for us in the combinations with ivonescimab. Thank you.

[Interpreted] SMBC Nikko Securities, Mr. Wada, please.

[Interpreted] This is Wada from SMBC Nikko Securities. I have a question for John-san. One question. Ivonescimab and -- yes, combination therapy with ivonescimab, Keytruda and Opdivo, next generation wise, there is high expectation. And there is the synergy effect being viewed and is set to become the backbone therapy for cancer treatment. And there are various documents provided. And chemotherapies and ADCs, there are a lot of combination therapies taking place. Can DATROWAY have backbone usage in combination with PD-1 and VEGF?

Is -- what is the mechanism of action, positive points that makes DATROWAY backbone to be combined with other treatments?

Thank you for your question. And what we've seen so far is really good results from PD-1 as the starting point. And if we look back for the last 5 to 7 years, the approach many people took was combinations of immunotherapy with immunotherapy. And we've not seen very much progress in combinations of immunotherapy, PD-L1 or PD-1 specifically with other IO agents. However, I think complementary mechanisms of approach for tumor types such as non-small cell lung cancer is one that has demonstrated really good effects. What we've seen so far is in specific populations, the PD-1 plus VEGF, where you actually are starving the tumor of their vasculature -- actually with immuno-oncology is a unique mechanism that demonstrated advancements.

Also what we're testing, and we should be able to find out in the very near future is the TROP2 ADC with a specific cytotoxic payload differentiated from previous ADCs may have effect through DATROWAY. In this way, complementary mechanisms of immuno-oncology with the VEGF potentially with an ADC such as a TROP2 ADC may have the best effect and that may be an approach looking at approaching tumor types such as non-small cell lung cancer that would allow us to get the best effect. And that's what we're really driving for and that's what we're hoping to get results from in combination with ivonescimab and potentially other PD-1 VEGFs in that class of drugs.

Obviously, some of the approaches that we're going to have to take is to find the right balance of what is the right dosing for these drugs, and that's some of the steps that we will be taking based on the results that we see. Thank you.

Next question is Michael Nedelcovych, TD Cowen, please.

I have 2 for John. John, first, just a follow-up on your comment around AVANZAR interim PFS analysis not having been conducted yet. Can you confirm whether that also means futility analyses have not been conducted?

Yes, thanks for your question. We did not conduct an interim PFS and the futility we passed. So there's no concerns about futility in the specific patient population.

Wonderful. Very clear. And then my other question is actually a follow-up on the commentary around I-DXd filing withdrawal. Can you provide any more details on that decision given that the application received priority review and Daiichi and Merck had just experienced a similar issue with HER3 DXd? This came as quite a surprise. You noted that the FDA emphasized the Phase III trial, but it had already been initiated. So I'm a bit confused as to why the company and the FDA were not already aligned on the potential for accelerated approval. I guess one explanation could be that the Phase III trial recruited faster than anticipated, but it looks like the primary completion date on clinicaltrials.gov was actually delayed in August, not advanced. So just any additional detail on how that proceeded would be very helpful.

Sure. Happy to give you some additional comments and background on I-DXd. In terms of the I-DXd and the extensive stage small cell lung cancer landscape, as you probably know, the competitive set around the treatment for patients with small cell lung cancer is advancing very quickly. We had good discussions with the regulatory agency. We are almost completed for our Phase III program for I-DXd. And in terms of time lines, overall, we are advancing with speed given the time lines and some of the discussions that we have with the FDA, we agreed with the FDA that the best approach would be to advance with our Phase III results that would become available. So that's the background that I could share with you.

[Interpreted] [Operator Instructions] JPMorgan, Mr. Wakao.

[Interpreted] I would like to ask you another question for John. So do you think it is reasonable to expect the KEYNOTE-189, this meant to achieve a longer PFS day than the roughly 8 months in the original 189 study? If so, what factor could explain that improvement?

Yes. I can't speculate on the results from KEYNOTE-189. But I will say that as we've seen in the general community that physicians have gotten a better understanding of use of immuno-oncology agents such as PD-1 since start of some of these trials. So with that, as with any trial that gets into the marketplace, as you get more familiarity, you also understand how to manage the adverse event profiles of these drugs. So while the data is blinded for AVANZAR, TL07 and 08, what I can say is that I do believe that physicians have a better understanding of how to use PD-1 therapies, but that doesn't explain everything and our studies are blinded, and I won't comment on the powering or the advancement of our programs, but I can tell you about clinical practice.

[Interpreted] Next is Sogi-san from Bernstein.

I have another question to John. So it looks like the bladder cancer is quite exciting the opportunity for DATROWAY. And I see that you're already conducting the Phase III in second line as well as you have initiated the adjuvant setting. And so the first line, I have a question for first line. Is this something that you are not pursuing because of the strong data coming from the Padcev KEYTRUDA or you're waiting for some additional data that could allow you to make decision on the first line?

Yes. So for urothelial advancement for overall TROPION 03 and 04, those are advancing. We do have a Phase I/II study, and the information will better inform how we will advance in the first-line treatment regimen.

And one more quickly, if I may. And also, we understand that you guys are conducting Phase II pan-tumor trials for 3 ADCs, IDXd, R-DXd and HER3-DXd. When are we going to see the data?

Yes. As with any of our programs, we do the pan-tumor trials to understand where each of these DXds have the most effect across various tumor types. We do have -- because these are early signal-seeking studies, we actually roll out these studies over time as we fully recruit in each one of these tumor types. So over the next -- whether it would be a year or next 2 years, as these patients are fully recruited in each of these specific settings, we'll be releasing those results.

Can I expect something starting to come up in next year, 2027?

I won't specifically highlight the timing because we have not disclosed those, but I think we will be sharing those information in the very near future. Thank you.

Next question is Tony Ren, Macquarie, please.

Just another quick follow-up question, again to John. Are you guys planning to put more ADCs based on your modified PDB technology into clinical development? I know there was an earlier announcement in a year. Just wanted to see what's your thinking on that construct right now?

Thanks. We do have advancements in the next generation of ADCs and our research team, I'm very proud of the work that they've been doing. We do have subsequent advances and looking at whether that's the linker, payload relationship and different cytotoxic payloads. So you will be hearing about them we are not specifically disclosing any of our payloads as obviously for obvious reasons. So as soon as that's available, we will share in generality what those are, but we won't be sharing specific details about them. But I will say that many of them are moving forward and very close to the clinic.

[Interpreted] Investor and Analyst Q&A session is going to be closed, and all the investors and analysts, thank you so much for your time today. After this, starting from 10 minutes past 7 p.m., we would like to start Q&A with journalists. And please continue to participate in this Q&A session.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[Interpreted] We are going to start Daiichi Sankyo's FY 2026 First Quarter Financial Results Presentation. I'm delighted to serve as MC today. I'm Ari Fujishiro from the Investor Relations and Shareholder Relations Department. First, about the language. In this briefing session, we are going to use Japanese and English. Simultaneous translation is available. [Operator Instructions] On Zoom screen and during live streaming, we will show a presentation material in Japanese. We have posted a presentation in both Japanese and English on our corporate website under IR library, financial results presentation material. Please download the files if necessary.

Today, 3 members are in attendance: Senior Executive Officer, CFO, Tomohiro Kodama; Corporate Officer, Head of Development Function, Akihiro Inoguchi; and Director, Head of Oncology Business Unit, Ken Keller. First, Kodama will explain the correction of FY 2025 consolidated financial results. And then Kodama and Inoguchi will explain the overview of FY 2026 first quarter results, et cetera. Then we will entertain your questions at the end.

Please note that this meeting is being recorded. Thank you for your understanding. We are now starting the presentation. Kodama-san, please.

[Interpreted] Kodama speaking. Thank you very much for joining Daiichi Sankyo's financial results presentation out of your very busy schedule today. I'm going to explain the correction of FY 2025 consolidated financial results and the announcement of FY 2026 first quarter consolidated financial results based on our presentation materials.

Please turn to Page 3. Today, we are going to explain the correction of FY 2025 financial results, the announcement of FY 2026 first quarter financial results, FY 2026 forecast, business update and R&D update in that order. R&D update will be explained by Akihiro Inoguchi, Head of Development Function. We will entertain your questions at the end.

Please turn to Page 4. We submitted the correction of part of the consolidated financial results for the period ending in March 2026 to the Tokyo Stock Exchange today on the 31st of July 2026. This slide shows the correction we made. First, let me explain the background leading to the correction.

After announcing the Daiichi report for the period ending in March 2026 in the fourth week of July 2026, during the process to analyze FY 2026 first quarter financial results, we found unclear variance in the SG&A expense figures. We immediately investigated the cause and confirmed putting errors in accounts payable for suppliers. So we disclosed the correction of the relevant payables and related items. This is attributable to individual processing errors. We judge that this would not undermine the effectiveness of internal control for financial reporting as a whole.

The statements of PL and financial status are here as was announced in the timely disclosure. Now we are checking the content for the -- to be corrected in the security reports we submitted on June 19, 2026. Once this is finalized, we will submit immediately.

Please turn to Page 5. Page 5 shows our main KPIs under the 5-year business plan. You can find the results after the correction. We'd like to express our sincere apology for causing inconvenience and concern to shareholders and investors. We are discussing measures to prevent the recurrence, and we will continue to make efforts to strengthen our internal control.

Next, I'd like to move on to explain the FY 2026 first quarter results. Please turn to Page 7. This is a summary of FY 2026 first quarter results and FY 2026 forecast update. In the first quarter, there was a significant increase in our revenue led by our mainstay products, Enhertu's and Datroway's product sales growth. So we have been able to make a very good start in FY 2026. On the other hand, operating profit decreased due to restructuring expenses related to EU Specialty Business Unit, et cetera. But excluding that impact, core operating profit increased.

As for FY 2026 forecast, we are revising our revenue forecast upward to JPY 2.340 trillion due to the yen's depreciation and stronger-than-expected product sales of Enhertu in the United States. Due to the reversal of provision for losses related to cancellation of Odawara site investments, operating profit forecast is revised upward to JPY 320 billion.

Please turn to Page 8. This is an overview of FY 2026 first quarter consolidated results. Revenue increased by JPY 100.1 billion or 21.1% year-on-year to reach JPY 574.7 billion. Cost of sales increased by JPY 38.5 billion from the previous year. SG&A expenses rose by JPY 45.9 billion, and R&D expenditure increased by JPY 9.5 billion year-on-year. We booked CMO compensation fee of JPY 1 billion as foreign exchange rate fluctuations.

As a result, core operating profit increased by JPY 6.3 billion or 6.2% year-on-year to reach JPY 107.3 billion. Operating profit, including noncore income and expenses decreased by JPY 11.6 billion or 12% year-on-year to JPY 85.1 billion. Profit attributable to owners of the company decreased by JPY 16.9 billion year-on-year to reach JPY 68.6 billion. As for the actual currency rates, the yen depreciated by JPY 14.89 against the U.S. dollar and by JPY 21.57 against the euro year-on-year.

Please turn to Page 9. From here, let me explain positive and negative factors for revenue compared to the previous year. Revenue increased by JPY 100.1 billion year-on-year. I will explain its breakdown by business unit. First, Japan business unit. Sales increased for anticancer agents, Enhertu and Datroway and pain treatment, Tarlige, but sales of direct oral anticoagulant Lixiana declined due to nearly 20% price cut in FY 2026 NHI drug price revision. So Japan business revenue decreased by JPY 700 million in total.

Next, let me explain our overseas business units. Here, ForEx impact is excluded. In oncology business, sales of Enhertu and Datroway rose by JPY 35.8 billion and JPY 11.9 billion, respectively, due to their strong growth in the United States, in particular, so revenue increased by JPY 47.8 billion in total. As for American region, revenue declined by JPY 11 billion due to revenue decrease for iron deficiency anemia treatment, Venofer and Injectafer and generic injectables.

Revenue for EU Specialty Business increased by JPY 2.2 billion as sales grew for hypercholesterolemia treatments, Nilemdo/Nustendi. In ASCA business responsible for Asia, South and Central American regions, revenue rose by JPY 4.7 billion due to the growth of Enhertu in the respective countries. As for upfront payment and regulatory sales milestone, et cetera, related to alliance with AstraZeneca and US Merck, we booked as revenue, regulatory milestone payments associated with the approval of Enhertu for breast cancer, neoadjuvant and adjuvant therapies in the United States and solid tumors in Europe and the approval of Datroway for triple-negative breast cancer in the United States. So revenue increased by JPY 15.2 billion. ForEx impact increased our revenue by JPY 41.9 billion in total.

Slide 10 shows the factors behind the change in operating profit. As explained earlier, revenue increased JPY 100.1 billion, including the impact of foreign exchange. Next, let me explain cost of sales and expenses. Regarding cost of sales, other cost of sales increased due to higher costs associated with the increase in revenue and the recording of an inventory-related valuation loss. Adding the foreign exchange impact of the CMO compensation, cost of sales increased by a total of JPY 38.5 billion.

SG&A expenses increased JPY 45.9 billion, mainly due to an increase in the profit share paid to AstraZeneca. R&D expenses increased JPY 9.5 billion due to the impact of yen depreciation and increase in R&D investment associated with the development progress of the 5DXd ADCs and other programs. Noncore expenses increased by a total of JPY 17.2 billion, reflecting an increase due to EU Specialty Business Unit, restructuring expenses and others offset by a decrease due to the reversal of the provision related to the cancellation of investment at Odawara Plant.

The ForEx impact on expenses was an increase of JPY 12.7 billion in cost of sales JPY 10.9 billion in SG&A expenses and JPY 8.6 billion in R&D expenses for a total of JPY 32.2 billion, including the impact of ForEx. Operating profit decreased by JPY 11.6 billion. Regarding our efforts toward achieving operational excellence, which underpins the strategy of the sixth 5-year business plan, we are advancing company-wide identification of areas with room for improvement centered on the use of AI and optimization of procurement and outsourcing costs, and we will implement measures sequentially, starting with the highest priority areas.

Next, I will explain the change in profit attributable to the owners of the company. As explained earlier, operating profit decreased JPY 11.6 billion. Financial income and expenses had a negative impact of JPY 2.5 billion. Income taxes increased JPY 2.8 billion due to a higher effective tax rate compared year-on-year. As a result, profit attributable to owners of the company decreased JPY 16.9 billion year-on-year to JPY 68.6 billion.

Next, I will discuss the revision of the FY 2026 consolidated earnings forecast. Please turn to Slide 13. The foreign exchange rate assumptions from the second quarter onward are JPY 155 to the U.S. dollar and JPY 180 to the euro. The impact of the yen's depreciation since the forecast announced in May is estimated to be an increase of approximately JPY 40 billion in revenue and approximately JPY 2 billion in operating profit.

Compared with the forecast announced in May, revenue reflects a revision to the Enhertu sales plan for the ASCA business unit, offset by the impact of yen depreciation, sales expansion led by Enhertu in the U.S. and expanded sales of Nilemdo/Nustendi in the EU Specialty Unit and is revised upward by JPY 60 billion from the May forecast to JPY 2.34 trillion.

Cost of sales is expected to increase by JPY 20 billion, reflecting the upward revision to the revenue forecast, higher cost due to foreign exchange and the recording of an inventory-related valuation loss. SG&A expenses are expected to increase by JPY 40 billion due to the impact of ForEx and an increase in the profit share associated with higher Enhertu sales. R&D expenses, although affected by an increase due to foreign exchange are maintained at JPY 500 billion, the same as the May forecast, reflecting the timing shift of certain expenses and the refinement of medical affairs expenses. As a result, core operating profit is maintained at JPY 360 billion, the same as the May forecast.

Operating profit is set at JPY 320 billion, reflecting unexpected full year decrease of JPY 5 billion in noncore expense, resulting from the recording in the first quarter of the reversal of the provision related to the cancellation of investment at the Odawara Plant as a reduction in noncore expenses. Profit before income tax is set at JPY 334 billion, reflecting the revision to operating profit. Profit attributable to owners of the parent is set at JPY 251 billion reflecting an anticipated revision to the deductible amount of R&D expenses for tax purposes.

Next, I will discuss the business update in Slide 15. The slide shows the sales status of Enhertu. Global product sales in the fiscal quarter FY 2026 increased JPY 64 billion year-on-year to JPY 219.2 billion. In the U.S., we obtained 2 new indications simultaneously in May, neoadjuvant and adjuvant treatment of HER2-positive breast cancer. In terms of sales growth, in addition to maintaining the #1 new patient share in existing indications such as breast cancer, gastric cancer and lung cancer in major countries and regions. As we have to date, new patient share is steadily expanding in first-line treatment of HER2-positive breast cancer in the U.S. with more than 1 in 3 eligible patients now receiving treatment with Enhertu.

In addition, since beginning promotion as the only anti-HER2 ADC treatment for multiple HER2-positive solid tumors, prescriptions have steadily expanded due to very high unmet need, and this has come to drive sales growth in the U.S. The solid tumor indication received approval in Japan this past March and is steadily gaining market penetration.

It also received approval in Europe in June this year, where promotion has begun. For some of the cancer types, including among the multiple HER2-positive solid tumors, multiple Phase III trials are currently ongoing, and we expect these to contribute to future sales growth of Enhertu. Regarding the NCCN guidelines, Enhertu has been newly listed for neoadjuvant treatment of HER2-positive breast cancer.

Next, I will discuss Datroway. Please turn to Slide 16. Global product sales in the fiscal quarter of FY '26 increased JPY 15.3 billion year-on-year to JPY 20.6 billion. Since launch, approximately 7,000 patients globally have been treated cumulatively and market penetration is progressing steadily. New indications include hormone receptor positive HER2-negative breast cancer in Brazil in March, first-line treatment for triple-negative breast cancer as the first anti-TROP2 ADC treatment for this indication in the U.S. and Brazil in May. And this past week, approval for EGFR-mutated NSCLC in Brazil, where promotion has begun.

In addition, as announced in today's news press release, we have received approval for the first-line triple-negative breast cancer in Europe. Sales continue to expand steadily in the existing indications of hormone receptor positive, HER2-negative breast cancer and EGFR-mutated NSCLC. And in particular, Datroway maintains the #1 patient share in third line and later EGFR-mutated NSCLC, driving sales growth in the U.S. For triple-negative breast cancer, for which a promotion began in the U.S. in May, we have already confirmed an increase in new patient prescriptions.

In this first quarter, Enhertu and Datroway together obtained 3 new indications, all of which are for breast cancer. So we are now able to offer treatment options across a broad range of treatment lines from early stage to metastatic disease. And in the metastatic setting, we can offer treatment options to more than 90% of patients, and we are confident that this has further strengthened our leadership in the breast cancer field. We will continue to pursue further market penetration in existing regions and expand into new launch countries regions while pursuing new indications in order to deliver Enhertu and Datroway to as many patients as possible who need them.

This concludes the business update. I will now hand over to Inoguchi, Head of R&D Division for the R&D update.

[Interpreted] Inoguchi speaking, I am going to talk about R&D update. Please turn to Page 18. First, I will explain our research policy under the sixth 5-year business plan. We define breakthrough generating technology or BGT, as Daiichi Sankyo's proprietary innovative technology to deliver more innovative medicines to patients faster. DXd ADC is our first BGT. Under the fifth 5-year business plan, we positioned 5 DXd ADCs, Enhertu, Datroway, HER3-DXd, I-DXd and R-DXd as important assets and focused on their development.

Including DS-3939 and DS-3790, we have 7 DXd-ADCs. Also during the sixth 5-year business plan period, these assets will continue to drive our growth. On the other hand, during the fifth 5-year business plan, out of the development candidates, which we call, Next Wave, we also identified what could be the core technologies in the future. Based on our science and technology in the coming 5 years, we will identify multiple technology platforms, which could become next BGTs, and we will nurture them into innovative drugs with which we can contribute to patients. We will use future financial results presentations and other occasions to share the progress. So please count on us.

Next, I will give you an update on each product. From Page 19, I will use 2 pages to report the progress of Enhertu. In May this year, as an indication expansion to HER2-positive early breast cancer, Enhertu obtained 2 approvals in the neoadjuvant and adjuvant settings in the United States. In the neoadjuvant setting, based on DESTINY-Breast11 study data, 4 cycles of Enhertu followed by 4 cycles of THP, taxane, trastuzumab and pertuzumab can be administered to patients with HER2-positive Stage II or Stage III breast cancer.

In China, the same indication was approved in March this year. In the adjuvant settings, based on Breast05 study data, 14 cycles of Enhertu can be administered to breast cancer patients with residual invasive disease following neoadjuvant chemotherapy, including anti-HER2 therapy. Based on these approvals in the United States, for HER2-positive breast cancer, we can offer Enhertu as a treatment option to cover treatment lines from early stage to metastatic stage. We are very pleased to be able to contribute to more patients with HER2-positive breast cancer.

Page 20 shows regulatory updates for Enhertu in a tumor-agnostic indication. Based on the results of DESTINY-PanTumor02 and other studies, approval was granted in June this year for HER2-positive solid tumors in Europe. Accordingly, we obtained tumor-agnostic approval across the 3 major markets in Japan, U.S. and Europe. Also in China, based on the results of DESTINY-PanTumor03 as a bridging study, et cetera, the application is now under review.

From Page 21, I will explain the progress of Datroway. According to TROPION-Breast02 study data, Datroway improved median PFS by 5.3 months and median OS by 5 months compared to chemotherapy and demonstrated the statistically significant clinically meaningful benefit. Based on the study results in May this year in the United States, Datroway was approved for patients with first-line metastatic or unresectable TNBC who are not candidate for PD-1/PD-L1 inhibitor therapy. As an update, as Kodama mentioned in the business update, the same indication was also approved in Europe as well.

Regulatory submissions for the same indication are now under review in Japan and China. On Page 22, I will share new Phase III studies. TROPION-Urothelial04 is an adjuvant study for MIUC, muscle-invasive urothelial carcinoma post surgery to investigate Datroway plus rilvegostomig compared to standard of care. In the first-line urothelial carcinoma cohort of the preceding TROPION-PanTumor03 study, Datroway plus rilvegostomig delivered favorable results, an ORR of 68.2% and 12-month PFS rate of 73.5%. We will continue the study so that this combination therapy as a treatment option can contribute to address high unmet medical needs in urothelial carcinoma.

Slide 23 introduces a new project entering Phase I trials. DS1025 is a novel ADC that targets CD25 positive regulatory T cells, activating antitumor immunity by eliminating regulatory T cells within the tumor. It applies DXd ADC technology to an anti-CD25 antibody and carries a cytotoxic payload optimized for immuno-oncology. In preclinical studies, we have confirmed a reduction in intratumoral regulatory T cells, activation of cytotoxic T cells and antitumor efficacy. We plan to begin a first-in-human trial in solid tumors in the first half of this fiscal year.

Slide 24 shows the progress on our Next Wave products. MIMRIT, an MMR vaccine for the prevention of measles, mumps and rubella received approval in Japan this May. VANFLYTA received approval in China this past June for first-line treatment of FLT3-ITD mutated AML.

Finally, the news flow going forward. Please turn to Slide 25. For Enhertu's DESTINY-Breast09 trial, we expect to receive regulatory decisions in Europe in the first half of this fiscal year. For I-DXd, we expect to receive a regulatory decision from the U.S. FDA on the IDeate-Lung01 trial in the second half of this fiscal year. Regarding the expected timing for obtaining key data in the near future, the expected timing for Enhertu's DESTINY-Lung04 trial and Datroway's TROPION-Lung15 and AVANZAR trials remains unchanged from before.

On the other hand, the expected timing for TROPION-Lung07 data is now FY 2027. As for major planned conference presentations, at ESMO, we plan to present the first data from the melanoma cohort of the HERTHENA-PanTumor01 trial, an update on the IDeate-Lung01 trial, an update on the Phase II dose optimization part of the REJOICE-Ovarian01 study and data from the bevacizumab combination cohort of the dose escalation part of the REJOICE-Ovarian02 study.

Slide 26 onwards is appendix, so please review it at your leisure time. That concludes my presentation. Thank you.

[Interpreted] From here on, we are moving on to a Q&A session. You can ask questions either in Japanese or English. [Operator Instructions] Mr. Yamaguchi from Citigroup Securities, please.

[Interpreted] Can you hear me?

[Interpreted] Yes, we can hear you.

[Interpreted] Yamaguchi from Citigroup Securities. My first question goes to Kodama-san. Regarding the change of your results forecast, sales revenue are increasing and inventory assets related processing was also included. Could you elaborate on this point? The details on the value or the amount? This is just for Q1. So could you explain this portion, please?

[Interpreted] Thank you for your question. Regarding the revision of our forecast and inventory assets and also the valuation loss included in the COGS. Thank you for your question. As you know, in the Q1, this is being booked. These are the main items. Regarding the multiple products, we had some errors in the manufacturing and some which did not meet specifications, we had valuation losses for these products and also the losses for disposal. This is the upper side of the JPY 1 billion level as a size.

[Interpreted] Understood. My second question is to Keller-san. I-DXd, I think the October 10 was a PDUFA. And of course, until then, you don't know whether it's approved. But if it's approved, I think we'll be starting for the first time, co-promotion with Merck. Could you share with us -- give us some comments, what is the preparation status now?

Thank you for your question. So correct, the PDUFA date is in October. The first indication will be for small cell lung cancer. This is a group of patients with a very high unmet need. The work that we're doing with Merck today is to work and educate the key opinion leaders, those physicians who really set the guidelines for how to treat small cell lung cancer. And based on what we're hearing, the -- those physicians are very excited to have a new drug in their hands. We believe they will embrace this drug quickly. And so we hope to bring this drug to these physicians and the patients as soon as possible. But right now, we're working to really educate the key opinion leaders about the mechanism of action, the clinical trial and how best to use this drug. Thank you.

[Interpreted] Next, UBS Securities, Mr. Sakai, please.

[Interpreted] Sakai from UBS. My first question goes to Kodama-san. The correction of the results in the past, why in May, you didn't identify this issue in the analysis. But why in the fourth week of July? So I have doubt about the effectiveness of internal control. Why you process this as an individual event. And there is a decrease of expenses by JPY 29 billion. In the current quarter, and you increased the SG&A by JPY 15 billion to JPY 535 billion. So usually, when you develop the budget, you compare to the previous year. Why there is an increase by JPY 200 billion in this line? Is this really the operational excellence? I'd like to ask you.

[Interpreted] Sakai-san, thank you for your question. Regarding the correction of the FY 2025 financial results, the process to identify this problem is as follows. Last week, we were analyzing the results for the first quarter of FY 2026, and we are analyzing the increase or decrease compared to the previous fiscal year. There was some decrease in expenses, which we couldn't fully explain. So we investigated that figure to identify this problem.

Why not in the fourth quarter? Why we are not able to identify this issue in the fourth quarter. We also feel that way. So this is a lesson we learned. Based on the size of our expenses and the mistake this time and also the amount for the item was quite large with the error. So unfortunately, in our analysis, we couldn't discover this problem. So there were various figures being included or excluded, and we couldn't identify this in reality.

And one more question is to compare to the previous fiscal year, the increase in the current fiscal year. So it seems that there's an increase by JPY 100 billion because of JPY 535 billion.

[Interpreted] After revision, JPY 434.2 billion after revision, JPY 432.2 billion, which line is this figure in the supplementary material, quarterly data? Let me check the figure. This is on Page 50 in the supplementary material, and this is the quarterly data. You're talking about Page 15, right? Allow me to check the figures, and we will try to explain to you. Sorry for that.

[Interpreted] My second question goes to Inoguchi-san, TL07 study top line results is postponed to be available in FY 2027. Previously, it was available -- supposed to be available in the second half of FY '26. Could you give us more details what's going on?

[Interpreted] Thank you for your question. Regarding the TL07 top line available timing, I'd like to explain the background reasons. Regarding this study, in the primary endpoint, biomarkers are going to be used. And as we incorporate this biomarker, we revisited the schedule. And then we found that the top line results will be available in the next fiscal year. That is the process. Thank you very much.

[Interpreted] Next, Goldman Sachs Securities, Mr. Ueda, please.

[Interpreted] Ueda from Goldman Sachs Securities. My first question, regarding the COGS, ADC forecast and outlook is being revised. So I have a question. At Odawara site, you canceled investments, and there is a reversal of the cost. And what about the CMO compensation fees? In the first quarter, it was not emerging so much. So what is going to be a schedule for this? And what about the possibility of potential fluctuations about the reversal of provision for losses related to cancellation of Odawara site investments.

[Interpreted] So regarding the COGS, the reversal of provision for losses related to cancellation of Odawara site investment, you'd like to know the reason why and also the future outlook of our CMO compensation fees. First, the reversal of provision of losses related to cancellation of Odawara site investments at the end of last fiscal year, in our outlook back then, we booked a provision, but we had discussions with suppliers. And also based on that, we booked the reversal of provision of losses related to Odawara site investment cancellation. We refined the figures after the discussions. That's the background.

Next, CMO compensation fee provision. JPY 1 billion is being booked. We booked in the previous fiscal year, the provision because of the ForEx fluctuation, that's now factored in. And JPY 80 billion is the guidance for FY 2026. This year -- later this year, from the end of this year to the beginning of next year, in FY 2028, manufacturing orders will be coming firm. So the amount is going to be finalized in that process. So regarding the booking, it's going to be in the third quarter or beyond according to our current outlook. Regarding the amount, JPY 80 billion is the guidance, and there is no element to change this forecast.

[Interpreted] Second question also goes to, I think, Kodama-san. Regarding the SG&A expenses outlook. In your plan, other than profit share, regarding the other SG&A expenses, there is a strategic investment expenditures mentioned. And as of the first quarter, how much is this? And in the full year basis, what will be the size of the amount? And in the next year and onward, I don't think that it will be continuing. Therefore, do you consider -- or is it okay for us to consider this as just onetime expense?

[Interpreted] Thank you for your question. SG&A expenses in the consolidated earnings forecast, and that is regarding the strategic and human resource-related investment. Regarding the contents, the question was asked. Regarding DX and IT within the operational excellence, we state the effective use of AI and also within the recent environment of talent, the human capital we have been investing more into our employees, and we are also investing in terms of education toward the reskilling of our people personnel to be engaged in highly advanced work.

And in the future, with AI investment and operational excellences, we would like to generate the benefit. But in this fiscal year, we started to make the investments in advance. And I believe that this kind of investment will be necessary on a continued basis. But at the same time, we need to enhance efficiency and saving the cost. Therefore, in the future, we would like to see an offset. So currently, it is conducted as advanced investment. And we don't plan to expand this in the scale from the next year onward, but this will not be ending in this fiscal year only. And our target is to produce the effect from this next fiscal year and onward.

[Interpreted] Next, JPMorgan Securities, Mr. Wakao, please.

[Interpreted] Wakao from JPMorgan speaking. My first question, on Page 13, I have a question to Kodama-san. As Yamagi-san said, the valuation loss for inventory assets, which products are tied to this? And what about the amount? And also the corporate tax revision of the tax deduction for R&D expenses. The profit was -- forecast was right upward up to the operating profit. But because of this, there is a downward revision. So I'd like to know the background.

[Interpreted] Thank you for your question. First, about the valuation loss for inventory assets, you'd like to know the breakdown by product. And number two is corporate tax. The tax rate is worsening. And why negative? And you'd like to know the reason why. First, the inventory assets. Regarding the products, it's not being disclosed. We have our own manufacturing, but also we are using CMO to manufacture on our own. Some noncompliance to quality occurred. That's why we are booking valuation losses. It's the upper side of the 2 digit in yen.

Second question is about corporate tax. Regarding the R&D expense deduction, there are different things under different tax systems in different countries. We have this mainly in Japan and the United States. In the group, Daiichi Sankyo Japan, DSI in our group, the corporate tax, the size of the profit for individual companies would determine the slot to be able to be eligible for R&D deduction. Comparing this fiscal year and the previous fiscal year, the profit in Japan and if you look at the size of profit in Japan, because of intercompany transactions, it's smaller slightly. Because of this, the profit mix would result in the less deductions.

On this point, when we explained we couldn't incorporate this fully in our full year forecast and where we will have profits during the fiscal year, and there is a slight difference compared to the initial forecast. That's why this is occurring. Sorry, it may be difficult to understand.

[Interpreted] I have a follow-up question. Talking about the inventory assets, I understand that you do not identify each specific item, but is it ADC-related ones? Because last year, I think there was also a valuation loss recorded regarding ADC-related assets. Therefore, I am concerned whether or not there is any structural-related issues going on.

[Interpreted] Well, ADC is included, although it's not everything. But partly, it includes the items relating to ADC.

[Interpreted] My second question is to Inoguchi-san, AVANZAR study. Within this year, I think we will see some results. And originally, my understanding is that the PFS final analysis will be planned and the intermediate the analysis will be conducted. And then after that, waiting for the final analysis results, you, together with AstraZeneca, will try to make a filing for approval.

And if the OS at the final analysis timing, that endpoint is met, that will be fine. But probably it's not matured yet at that timing. Therefore, with PFS data only, do you think that -- are you confident that you'll be able to make filing for approval given the current environmental changes? I have a slight question whether or not it is possible to make filing for approval with only PFS data.

[Interpreted] Thank you for your question. Regarding AVANZAR study data, regarding the data assessment, I think the question was made. As you know, PFS is one of the endpoints, and we are planning to get the study results. That's unchanged. And depending upon the OS data readout, I think we will make a comprehensive decision. But without having OS data, wouldn't it be working? I think we cannot make any comments on that particular point at this point in time. Basically, we look at PFS and OS data from a comprehensive viewpoint and consulting with the authorities, we will discuss whether or not we will be able to move on to the filing for approval.

[Interpreted] Next, Morgan Stanley, MUFG Securities. Mr. Muraoka, please.

[Interpreted] Muraoka from Morgan Stanley speaking. First, I have a question to Kodama-san. For revenues and sales per product, you revised the sales forecast for Enhertu. In ASCA region, there is a decrease by JPY 13 billion for Enhertu in ASCA. Given the ForEx rate, there is a substantial decrease in ASCA region as a whole, revenue declined. What's happening there? I couldn't understand fully. The first quarter results are not too bad. What is going to happen into the future?

[Interpreted] Thank you for your question. Enhertu sales forecast in the ASCA region is now revised downward, and you would like to know more about it. In ASCA region, China, Brazil, are the main countries in terms of sales. In China, competition is intensifying. Local ADCs just sold in China, and we have to compete, and there is such a competition and the impact was larger than we anticipated.

As for Brazil, there are various factors. A particularly big factor behind is as follows: there is a treatment network and hospital network where Enhertu is prescribed a lot. That hospital network itself had a worsening financial situation, it seems and treatment is not making a lot of progress. Purchasing the products for treatment are now becoming stagnant, as I'm hearing. And how much this impact is going to be prolonged, it's difficult to predict. But looking at the current situation, we are factoring in this impact on a full year basis. So these are the 2 major reasons.

[Interpreted] So can I assume that you were conservative in factoring this into your forecast? Or is this really a very difficult issue?

[Interpreted] Well, it's difficult to say. Regarding Brazil, if the environment is going to change, it's going to increase. So in that sense, I hope we can be conservative. But honestly speaking, we cannot really know. In China, this may be a structural factor.

[Interpreted] Another question is to Inoguchi-san. R-DXd, this time at ESMO, REJOICE-Ovarian01 additional data will be presented. And with those data, then are you going to enter into the preparation of filing for approval? Because for R-DXd, we haven't heard much about your preparation for filing. So what's necessary for you to start preparation for filing?

[Interpreted] Thank you for your question. For R-DXd data, Phase II dose optimization part will be presented at ESMO. As you know, this Phase II study will be providing us the data that will be a key data for us to proceed our development moving forward. At the same time, regarding our filing strategy, that's under review now. Therefore, at the time that we'll be able to share, we would like to talk more about the details of our strategy.

[Interpreted] So is it better for us to wait until we will be able to hear from you the filing strategy?

[Interpreted] At this point in time, we are still reviewing, including the filing strategy.

[Interpreted] Next, Bernstein Securities, Ms. Sogi, please.

[Interpreted] First, I have a question to Kodama-san. Guidance update, SG&A expenses strategic investments are one of the factors for the rising costs. So cost for sales are increasing? Or is this because of the ForEx impact or you have to do more? And you booked a restructuring cost in Europe. This means the headcount is reduced in next fiscal year and beyond, there would be a good impact on your costs. This positive impact will emerge when? And what is going to be the size and the level on an annual basis?

[Interpreted] Thank you for your question. The first question is other SG&A costs and the reason behind for the increase may include ForEx impact according to your view. And one more point is the restructuring in Europe. What about the impact on next fiscal year and beyond? And when we can see its effect? Regarding the SG&A expenses and the ForEx impact, thank you for your question. I couldn't explain that point earlier. There is the ForEx impact fully reflected here. There is an increase in reality. So both are the factors behind.

Regarding your second point, restructuring in Europe and its impact. It's going to -- we will be beginning to see its effect later in the fiscal year. As for the size of the impact in value, we don't have anything clear at hand right now. So once it's clear, we will share with you. It's going to be fully seen next fiscal year and beyond. And cardiovascular business in Europe is going to shrink. And organization is being shrunken accordingly. Your understanding is correct. And we want to take measures earlier under these circumstances. That's why.

Another question is a question to Inoguchi-san, 07, 08 or TL07, 08. First about 07, it is a 3-arm study and Datroway KEYTRUDA plus platinum or doublet, Datroway plus KEYTRUDA. These are included as experimental arms. Therefore, regardless of the first-line PD-L status, this is going to be the largest indication, I think. And triplet and doublet, both regimens may be approved as a result of this TL07. Is this understanding correct?

[Interpreted] Thank you for your question. Regarding TL07, as you said, there are 2 arms, doublet and triplet. And it depends on the results. But if both showing good results, positive results, then both will be available for treatment in our view.

And regarding 08?

Regarding 08 study, TROP2-QCS patient stratification analysis is not a part of primary endpoint, but I think it is one of the key secondary endpoints. And what I think a bit strange is that you have once explained about it as to the reason of not including it in the primary endpoint because KEYTRUDA is quite effective in PD-L1 high population. But the efficacy of KEYTRUDA, regardless of that, as on top, I think that way is added. Therefore, evaluating the efficacy, I think whether or not that KEYTRUDA is effective at the baseline, I don't think it's much impacting. And if it's effective, then there will be even more difficult to gain any upside.

[Interpreted] But once again, allow me to ask this question. In this 08, could you explain once more what is the reason that this is positioned as part of a key secondary endpoint?

[Interpreted] Thank you for your question. Regarding the inclusion of biomarkers, in TL08 study, that's included as a secondary endpoint. So you are right. There could be various different views on this point. But in high PD-L1 expressing subpopulation, pembro's treatment is SOC. And as a study design, we have pembrolizumab arm and pembro plus Datroway combination. Those 2 are compared. So this is add-on study. From that viewpoint, as a primary endpoint in ITT, whether we'll be able to expect a positive result, that is one of the background factor.

[Interpreted] I see. I am not fully convinced, but understood it.

[Interpreted] Next, Daiwa Securities, Mr. Hashiguchi, please.

[Interpreted] Hashiguchi speaking. I have a question to Inoguchi-san. DS1025 originality is the topic of my question. CD25 is a target. Regulatory T cell will be depleted. Several companies have been developing such a drug. Some came up with ADCs to take the challenge, ADCC activity can be reinforced to give it a try by some other companies. And your drug discovery concept, where is it differentiated? And as for payload, DXd ADC technology is being applied, but it's optimized for immuno-oncology. What's common? -- vis-a-vis the conventional DXd-ADC and what's different and other compounds under development using a payload like this?

[Interpreted] Your question is about DS1025. First, regarding this compound, conventional DXd ADC is not being used. As I explained, our DXd ADC technology is the platform and the foundation, but this is an ADC optimized by targeting the immune cells. Regarding the detailed information about payloads and others, we are sorry to say that we are refraining from sharing -- as for CD25 Treg -- it's an important -- one of the important markers for Treg. So DS1025 would deplete immunosuppressive Treg cells in the tumor microenvironment. That's how this compound is being created with that objective. That's all.

[Interpreted] So based on that concept, other companies' products might have been developed. So how -- what kind of differentiation you're expecting from 1025?

[Interpreted] I cannot elaborate on the detail in specifics, but we have built the DXd ADC technologies. We have experiences and the insights, that's a differentiating factor compared to other companies.

[Interpreted] There are some other people raising their hands, but we have passed the scheduled closing time. Therefore, with this, we'd like to conclude the earnings call. If you have more questions, please contact our IR unit. Thank you for your participation today. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[interpreted]

Thank you for waiting. We are going to start Daiichi Sankyo's FY 2025 Financial Results Announcement and FY 2026-FY 2030 5-year business plan presentation and discussion. I'm delighted to serve as MC today.

I'm Ari Fujishiro from the Investor Relations and Shareholder Relations Department. First, about the language. In this briefing session, we are going to use Japanese and English. Simultaneous translation is available. [Operator Instructions] On Zoom screen and during live streaming, we will show a presentation material in Japanese. We have posted a presentation in both Japanese and English on our corporate website under IR library, financial results presentation material or IR Presentation Materials section. Please download the files if necessary.

Today, 5 members are in attendance. Representative Director, President and CEO, Hiroyuki Okuzawa; Senior Executive Officer, CFO; Tomohiro Kodama; Director, Head of Oncology Business Unit, Ken Keller, Head of Global R&D, John Tsai, Senior Executive Officer, Head of R&D Division, Yuki Abe.

Today, after FY 2025 financial results announcement, we will present FY 2026 to FY 2030 5-year business plan. At the end, we will have time for Q&A with all the executives. We will entertain questions from investors and analysts until 8:00 p.m. We will take questions from members of the media from 10 minutes past date. Please note that this meeting is being recorded. Thank you for your understanding.

We are starting FY 2025 financial results announcement by Okuzawa-san, please.

[interpreted] Okuzawa speaking. Thank you very much for joining Daiichi Sankyo's FY 2025 financial results announcement and 5-year business plan presentation and discussion out of a very busy schedule today.

First, we'd like to sincerely apologize for rescheduling the dates of FY 2025 financial results announcement and 5-year business plan presentation and causing you inconvenience and concern. Due to the financial result forecast revision, we explained the other day, we thought that explaining FY 2025 financial results and 5-year business plan together would be the best way to help you understand the current situation of the company and future strategy properly, so we decided to reschedule the dates.

Today, we will explain FY 2025 consolidated results first, and then the 5-year business plan. We will entertain your questions at the end after the 2 presentations. Now our new CFO, Kodama, will explain FY 2025 consolidated results. Kodama-san, please.

[interpreted] Kodama speaking. Please turn to Page 5. These are the topics we are going to cover today. R&D update will be explained by John Tsai, who has assumed the post of Head of Global R&D since April this year.

Please turn to Page 6. This is the summary of the financial results. I will explain the details on the following pages. Please turn to Page 7. I will explain an overview of FY 2025 consolidated results. Revenue increased by JPY 236.8 billion or 12.6% year-on-year to reach JPY 2.123 they'reillion.

Cost of sales increased by JPY 25.6 billion from the previous year. SG&A expenses rose by JPY 134.8 billion, and R&D expenditure increased by JPY 29.3 billion year-on-year. As a result, core operating profit increased by JPY 47.1 billion or 15.1% year-on-year to reach JPY 360 billion. Operating profit, including temporary gains and losses, decreased by JPY 102.8 billion or 31% year-on-year to JPY 229.1 billion.

Profit attributable to owners of the company decreased by JPY 35.9 billion or 12.1% year-on-year to reach JPY 259.9 billion. You can find the actual currency rates on the slide. Please turn to Page 8. From here, let me explain positive and negative factors for revenue compared to the previous year. Revenue increased by JPY 236.8 billion year-on-year. I will explain its breakdown by business unit.

First, Japan business unit. Sales increased for anticancer agent, DATROWAY, direct oral -- rather pain treatment of Tarlige, direct oral anticoagulant Lixiana, et cetera. On the other hand, revenue decreased for influenza treatment Inavir. In addition, we booked realized gains on unrealized gains of inventory for Daiichi Sankyo Espha in FY 2024. So Japan business revenue increased by JPY 3.2 billion in total.

Next, let me explain our overseas business units. Here, ForEx impact is excluded. In Oncology business, revenue increased by JPY 152.2 billion due to the growth of ENHERTU and DATROWAY sales. As for American Regent, revenue declined by JPY 32.8 billion due to the impact of generic entry on iron deficiency anemia treatment and Venofer and the impact of price competition on Injectafer and generic injectables. Revenue for EU Specialty business increased by JPY 21.7 billion as sales grew for hypercholesterolemia treatment, Nilemdo/Nustendi. In ASCA business responsible for Asia, South and Central American regions, revenue rose by JPY 38.1 billion due to the growth of ENHERTU, mainly in China and Brazil. As for upfront payment and regulatory and sales milestones, et cetera, related to alliance with AstraZeneca and U.S. Merck, we booked as revenue, sales milestones, et cetera, we received from AstraZeneca in the fourth quarter. So revenue increased by JPY 32.5 billion. ForEx impact increased our revenue by JPY 21.8 billion in total.

Slide 9 shows the factors behind the change in core operating profit. I will explain the JPY 47.1 billion increase by item. As explained earlier, revenue increased by JPY 236.8 billion, including a positive foreign exchange impact of JPY 21.8 billion. Next, I will explain cost of sales and expenses, excluding foreign exchange impact. Cost of sales increased by JPY 19.9 billion, primarily due to the revenue growth and inventory valuation losses recorded in the second quarter for products, including ENHERTU.

Selling, general and administrative expenses increased by JPY 133.3 billion due to an increase in profit sharing with AstraZeneca as well as investments in DX and IT for medium- to long-term growth, expenses related to strengthening global talent development and strategic investments in human capital.

Research and development expenses increased by JPY 29.4 billion due mainly to increased R&D investments associated with the progress of development of the 5 DXd ADCs. The negative impact of foreign exchange totaled JPY 7.1 billion, and the underlying increase in core operating profit, excluding foreign exchange effects, was JPY 32.4 billion. Next, I will explain the changes in profit for the period on Slide 10.

Core operating profit increased by JPY 47.1 billion, including the impact of foreign exchange. As for the temporary income in the previous fiscal year, gains on the transfer of shares of Daiichi Sankyo Espha were recorded as onetime income. In the current fiscal year, although there were litigation-related gains associated with former Ranbaxy shareholders and gains from the liquidation of Ambit, which had been acquired as a subsidiary upon the in-licensing of quizartinib profit decreased slightly year-on-year due to the absence of gain recorded in the previous fiscal year.

For onetime expenses, a negative impact of JPY 149.9 billion on profit was recorded due to the recognition of costs, including compensation for losses incurred by CMOs, as previously explained, impairment losses and compensation related to the discontinuation of investment in the Odawara plant.

Environmental remediation costs for former Yasugawa plant and expenses associated with the next career support program implemented in Japan for the fourth quarter. As a result, operating profit of FY '25 decreased by JPY 102.8 billion year-on-year on JPY 229.1 billion.

Finance income and expenses had a positive profit impact of JPY 10.9 billion, mainly due to improvements in foreign exchange gains and losses. Income taxes decreased by JPY 56.5 billion due to a decline in profit before tax as well as an increase in R&D tax credits.

As for result, profit attributable to owners of the parent decreased by JPY 35.9 billion year-on-year to JPY 259.9 billion. Please turn to Slide 11. This slide shows the full year dividend forecast for FY 2025.

Although operating profit for FY 2025 decreased year-on-year, profit growth continued on core operating profit basis. Therefore, we will maintain the full year dividend forecast previously announced with the annual dividend per share expected to increase by JPY 18 year-on-year to JPY 78.

Please turn to Slide 12. This slide shows the results of our share repurchase program. In order to respond flexibly while comprehensively considering factors such as share price levels, we established a JPY 200 billion share repurchase authorization in April last year and ultimately repurchased JPY 91.8 billion worth of shares.

All shares acquired through this repurchase program will be canceled on June 10. Next, I will provide a business update. Please turn to Slide 14. This slide shows the sales performance of ENHERTU. Global product sales in FY 2025 increased by JPY 145.5 billion year-on-year to JPY 698.4 billion. Combined revenue recognized by Daiichi Sankyo and AstraZeneca outside Japan reached $5 billion, triggering a sales milestone payment of $537.5 million, and we received JPY 86 billion.

As for new indications obtained in the fourth quarter, in Japan, we launched the promotion activities in March for second-line treatment of HER2-positive gastric cancer and HER2-positive multiple solid tumors. In China, we obtained approval in January for second-line treatment of HER2-positive gastric cancer. And in March, we received the world's first approval for neoadjuvant indication in HER2-positive breast cancer and launched promotional activities. In addition for existing indicators, we have maintained the #1 share of new patient starts in major countries and regions and sales continue to grow steadily.

Global product sales for FY 2026 are forecast to increase by JPY 162.9 billion year-on-year to JPY 861.3 billion. In addition to product sales, we expect to receive a sales milestone payment of $625 million upon combined revenue recognized by Daiichi Sankyo and AstraZeneca outside Japan reaching $6 billion. So going forward, we also expect to obtain approvals in the United States for neoadjuvant HER2-positive breast cancer and post neoadjuvant HER2-positive breast cancer indications, which we hope will enable us to contribute to the treatment of patients with early-stage breast cancer.

Next, I will explain the sales performance of DATROWAY. Please turn to Slide 15. Global product sales in FY 2025 increased by JPY 46.2 billion year-on-year to JPY 47.6 billion. In addition to the steady market penetration of the breast cancer indication in Japan and the United States, the rapid market penetration of the lung cancer indication in the United States significantly increased the number of new patients and the product was prescribed to a cumulative total of more than 4,900 patients globally, approximately 1.6x higher than at the end of the previous year quarter. Regarding the NCCN guideline update, for first-line treatment for triple-negative breast cancer, the recommendation level was upgraded from Category 2A, other recommended to preferred.

Next is the R&D update. The presentation will now be handed over to John Tsaii, Global Head of R&D.

[interpreted] Thanks, Kodama-san. My name is John Tsai, and it's a pleasure to be here with you today. I started my role at the beginning of April, and I've been in this role for over 5 weeks, and I look forward to working with you. So as I start, I've had a chance to work very closely with the R&D organization and spent time with them. I've been really impressed with the innovation that's been coming out of the organization as well as the execution, and you'll be hearing about those as I go through the R&D update.

So as we move forward, I'd like to share with you the progress that's been made in 2025 also and also share looking forward, what will be happening in 2026. So let's dive into the slide here. Let's go on the current slide here. So ENHERTU demonstrated robust data in breast cancer in HER2-positive and HER2 low ultra-low going into 2025.

In 2025, there was expansion into earlier lines and also into additional indications. In the earlier lines of treatment in fiscal year 2025, we expanded into first-line HER2-positive breast cancer from DB09. This was approved by the FDA in December of 2025, and this indication is under review currently in Japan, EU and China. Going into earlier lines in the neoadjuvant setting, everyone saw the results of DB11 that demonstrated clinically meaningful improvement in pathological complete response in high-risk HER2-positive early breast cancer.

This led to the approval in China, which was in March, and this is currently under review in the U.S. Furthermore, in post neoadjuvant setting from DB05, we saw clinically meaningful improvement in invasive disease-free survival versus T-DM1 in high-risk HER2 breast cancer in the post neoadjuvant setting.

This indication is currently under review in the U.S., Japan, EU and China. With these indications, we also look to expand into earlier lines and into other tumor types. In 2025, we expanded into other tumor types such as in gynecological cancers. From DESTINY-Ovarian-01, this trial was started in December of 2025. And we also started DESTINY Endometrial01 and 02 trials, which you can see was started in June and also in December of last year.

Let's go to the next slide, where we can go into the details of ENHERTU DB11 in the neoadjuvant setting. As we said earlier, this was already approved in China. What we saw from DB11 is that 4 cycles of ENHERTU followed by THP versus the standard of care showed an 11.2% improvement in pathological complete response and a trend toward event-free survival.

This was demonstrated in patients with high risk of recurrence and includes a high number of patients who are hormone receptor positive, who generally have lower pathological complete response rates. As I said, this is under review in the U.S. Let's go to the next slide. Here is a summary of the current regulatory status for ENHERTU. We already heard that first-line DB09 was approved in the U.S. and the neoadjuvant approval was already approved in China. We have additional approvals that we're waiting for results. The post neoadjuvant DB05 has been accepted in the U.S., Japan and EU.

We also received 2 additional approvals in Japan, HER2-positive gastric cancer and the pan-tumor HER2-positive approval in Japan. Lastly, in the IHC3+ tumor in the HER2-positive patient population, the file has been accepted in April in China, and this is under priority review.

This gives you a good snapshot of all of the progress that was made in ENHERTU. And now we'll turn into looking at DATROWAY and the progress that was made there. DATROWAY also made significant progress and in 2024 was originally approved for HR-positive, HER2-negative breast cancer as the first initial indication.

In June of 2025, the second approval for DATROWAY was obtained for EGFR mutated patients from the TROP-Lung05 study after patients have been treated with EGFR TKI plus platinum chemotherapy. As we look at learning from some of the studies, we applied some of the learnings as we received the results from TROPION-Lung01 study, where we saw benefits more in the non-squamous patient population more than the squamous.

And importantly, what we also saw was the value of the TROP-2 biomarker. Based on the results that we found from TROPION-01, we've updated TROPION-Lung05 to add the TROPION-2 -- TROP-2 biomarker NMR positive to the primary endpoint for progression-free survival and overall survival. In addition to this, we also added the TROP-2 NMR biomarker to TROPION-Lung08, and that was in PD-L1 high positive patients.

We added this to the secondary endpoint for PFS and OS. Also in the lung space, we started TROPION-Lung17 in the TROP2-positive metastatic non-small cell second-line patient, and that trial was started in January of this year. In the area of breast cancer, we demonstrated positive results at ESMO just last year, where we showed strong results from TROPION-Breast02 in first-line triple-negative breast cancer. These were in patients who are not eligible for PD-1 and when we saw the combined positive score less than 10.

This filing is under review in the U.S., Japan and in China. In addition to earlier lines for DATROWAY, we expanded into other tumor types. You can see that we expanded into urothelial carcinoma in the Phase II/III trial, which is Urothelial03. This was started in October, where we will see DATROWAY plus carboplatin or cisplatin versus gemcitabine plus carboplatin or cisplatin. There was significant progress, as you can see here, made with DATROWAY.

As we look into the additional DXd ADCs, we made significant progress in these areas also. While we pushed the boundaries for HER3 ADC, we saw that the results did not demonstrate positive results in the EGFR-mutated lung cancer area.

But in addition to that, we did see progression and also progress for I-DXd where we saw robust data from the IDeate-Lung01 study for extensive stage small cell lung cancer on or after platinum therapy. Not only did we see this, we also expanded into additional indications for I-DXd for esophageal and prostate cancer. These were Phase III studies that were started in May and June of last year.

For the area of R-DXd, there was positive results presented at ESMO last year from the REJOICE ovarian-01 study. This was a Phase II dose optimization study for platinum-resistant patients who had CDH6 expression, and we were granted breakthrough designation for this specific indication. Lastly, for the DXd platform, we also started the first-in-human study for DS-3790. This was first-in-human start for the indication of relapsed and refractory B-cell lymphoma.

Looking beyond the DXd ADC platform, we have new modalities in oncology, and we started a number of new first-in-human studies. For DX-3610, this is an ADC with STING agonist as the payload. This was started in November of last year. For DS-5361, this is a small molecule NMD inhibitor, which activates by increasing neoantigens, and this was started in October.

And we also started a targeted protein degradation program, DS-9051, that was in November of last year. Next slide, please. As I shared those results, I'd like to also share with you the progress that was made with I-DXd as we are seeking our first approval for I-DXd based on the results of IDeate-02 study in extensive stage small cell lung cancer. As I said earlier, the results were shared at the WCLC Congress that demonstrated almost 50% reduction in overall response in previously treated extensive-stage small cell lung cancer patients.

This application has been filed with the FDA and given breakthrough designation and given priority review just earlier last month, and we expect a PDUFA date in October of this year. And also IDeate-02 Phase III study is currently ongoing. Go to the next slide, please. Beyond oncology, we continue to make progress. There's new programs in the immunology space with a planned first-in-human start in the first half of this year for DS-2001, an anti-ORAI1 antibody for autoimmune disease. Anti-ORAI1 is a major pore-forming Subunit of CRAC channel in immune cells, and this is in the area of immune diseases, as I stated earlier, and this is planned to start this year in the first half.

Go to the next slide, please. Based on all of these advancements, our R&D group has been recognized by the external community through a number of accomplishments, and we highlight 2 of them here. DAICHIRONA won the 2026 Pharmaceutical Society of Japan Award. This was based on the first made in Japan mRNA vaccine for COVID-19. In addition, Valemetostat or EZHARMIA received the 2025 Pharmaceutical Chemistry Division Award, and this is based on the first dual inhibitor of EZH1 and 2 and provides a new treatment option for all of those patients with a high unmet need with adult T-cell lymphoma.

Let's go to the next slide, please. Looking forward, I've shared with you a number of the progress and advancements made in 2025. And if we look at 2026, there are a number of regulatory decisions that we're looking forward to this year. As you heard, DESTINY-05 in the post neoadjuvant HER2-positive breast cancer area, we're expecting the regulatory decision in July of this year.

For DATROWAY TNBC first line, we're expecting that PDUFA date in June of 2026. And for I-DXd for extensive small cell lung cancer, second line, we're expecting the results and the feedback from the FDA in October of this year.

In addition to the regulatory readouts, we also have a number of data readouts this year. We're looking forward to ENHERTU DESTINY-Lung04 study in the first half of 2026. And in the first half of this year, we expect to get the results of TROPION-Lung07, TROPION-Lung15 and AVANZAR, these are all in the first-line patient population. We also expect to get results from R-DXd, where we have regulatory submission and where we are evaluating the submission of REJOICE-01.

While we saw positive results, we're awaiting the expansion of the Phase II data in order for the full submission. With that, you can also see some of the presentations that we will be sharing at ASCO later on at the end of this month. With this, these are all the accomplishments and what we will be looking forward to in 2026, and I will turn it back to Kodama-san for the fiscal 2026 forecast. Thank you.

[interpreted] Kodama, I will explain FY 2026 forecast. Please turn to Page 27. With the adoption of IFRS 18 presentation and disclosure in financial statements, the presentation of the consolidated income statement is scheduled to change effective from FY 2027 at Daiichi Sankyo Group in anticipation of the impact of this adoption, the definition of core operating profit is to be changed starting in FY 2026 when the sixth 5-year business plan begins.

You can find the table below to compare the previous definition and the new definition. CMO compensation fees and write-down of inventories, which were recorded as temporary expenses in FY 2025 are included in core operating profit under the new definition.

Regarding the impact on FY 2025 results due to changing the definition of core operating profit, please refer to an adjustment table on Page 38 in the appendix. Next, please turn to Page 28. Let me explain FY 2026 forecast. Changing the definition of core operating profit, which I explained earlier, is reflected on to FY 2025 results and FY 2026 forecast figures.

As for revenue, declining sales in the iron supplement business in the United States and drug price revision for Lixiana in Japan were negative factors, but there were positive factors such as revenue increase due to market penetration of ENHERTU and DATROWAY, especially in the United States. So we are forecasting revenue to increase by 7.4% or JPY 157 billion year-on-year to reach JPY 2.280 billion. Cost of sales are increasing due to revenue expansion, but cost ratio is improving due to changes in our product mix and CMO compensation fees are declining.

So we are expecting cost of sales to decrease by JPY 80.3 billion. CMO compensation fees of JPY 80 billion, we are recording as cost of sales for FY 2026 is the current estimate, expected to additionally arise by the end of FY 2026 due to short-term differences between our supply plan and the minimum purchase obligations to CMOs.

Specifically, this will be for 2028 to be included in FY 2026 as the new firm order period. With regards to core operating profit, expenses are expected to rise due to sales expansion of ENHERTU and DATROWAY, which will likely lead to increased profit share payment to AstraZeneca. On the other hand, gross profit increase is projected. So we are forecasting core operating profit to increase by 27.5% or JPY 77.6 billion to reach JPY 360 billion. Due to change in the definition of core operating profit, amortization expenses of intangible assets related to products will be classified as noncore expenses.

In addition, we are expecting EU specialty business unit restructuring expenses, but noncore expenses are going to decline year-on-year. So operating profit will go up by 37.5% or JPY 85.9 billion to reach JPY 315 billion according to our forecast. Pretax profit is expected to rise, but corporate tax will increase. And due to the stock transfer of Daiichi Sankyo Healthcare, profit attributable to noncontrolling interest is expected.

So we are forecasting profit attributable to owners of the company to be JPY 260 billion at a level similar to the previous year. Our ForEx assumptions are JPY 150 against the U.S. dollar and JPY 180 against the euro.

Please turn to Page 29. Here, let me explain FY 2026 annual dividend forecast. Under the sixth 5-year business plan, stable dividend will be distributed based on progressive dividends and adjusted DOEs. Adjusted DOE will be calculated based on adjusted shareholders' equity, which excludes items that fluctuate primarily due to share prices and exchange rates from total shareholders' equity. Increase of the dividend to JPY 100 per share, up by JPY 22 from JPY 78 in FY 2025 is planned in FY 2026, marking the fifth consecutive years of dividend increases.

Towards further growth under the sixth 5-year business plan, we will continue to enhance shareholder return. That's all for the results. Next, we are moving on to the sixth 5-year business plan presentation and discussion. Okuzawa-san, please.

Let me explain the sixth 5-year business plan. Please turn to Page 46. First, recap of the fifth 5-year business plan. Under the fifth 5-year business plan, we raised maximize 3 ADCs, profit growth for current business and products, identify and build pillars for further growth and create shared value with stakeholders as 4 strategic pillars. We worked hard to realize 2025 goal and shift to further growth.

Let me recap the main progress for each, respectively. Please turn to Page 47. This is a summary for maximizing 3 ADCs. The oncology business achieved significant growth driven by ENHERTU and DATROWAY. Also, we entered into a strategic alliance with U.S. Merck as well in addition to AstraZeneca, strengthening the structure for global development and commercialization is ongoing. ENHERTU transformed standard of care in HER2-positive breast cancer and has established HER2 low and ultra-low breast cancer as a new therapeutic area.

DATROWAY provided new treatment option to patients with limited treatment options and also updated lung cancer strategies by implementing novel biomarker based on learnings from TROPION-Lung01 study. As for the subsequent 3 ADC products, we revised the timing to launch HER3-DXd, but we are accelerating I-DXd and R-DXd development through our collaboration with U.S. Merck. Growth is making progress for the DXd ADC portfolio as a whole.

Regarding manufacturing and supply, we revised the supply plan and optimize the global supply chain. In addition, we resolved patent dispute with Seagen Inc., confirming DXd ADC as Daiichi Sankyo's proprietary technology. Please turn to Page 48. Next, I will recap the progress for 3 strategic pillars and business foundations. In the current business, specialty medicines such as Lixiana grew, while profit declined in the iron supplementation business by American region.

Also, we advanced transformation toward an innovative medicine business structure through the transfer of shares in Daiichi Sankyo Espha and Daiichi Sankyo Healthcare. Under the strategic pillar to identify and build pillars for further growth, in-house development of DS-9606 was discontinued, but the modified PBD ADC technology was successfully validated, and we generated new platform technology candidates as well.

As for shareholder return, we increased dividends annually in line with profit growth, executed flexible share buybacks and achieved DOE of over 8%. Please turn to Page 49. This page shows the financial targets at the time of developing the fifth 5-year business plan and the final results as of March 2026.

Over the last 5 years, oncology business grew substantially. FY 2025 revenue was JPY 2.123 billion and revenue in oncology was JPY 954 billion. We achieved our initial target for both. On the other hand, core operating profit ratio before R&D was 38.7%, which fell short of the 40% target. ROE was 17.9% in FY 2024, above the target, but was 15.8% in FY '25 as CMO compensation fees were recorded.

DOE was 8.7%, achieving our target. Next, please look at Page 50. This page shows an overview of the recap. Between FY 2021 and FY 2025, both revenue and core operating profit grew substantially, and we believe we realized transformation into a global pharma innovator with competitive edge in oncology, which was raised as our 2025 vision.

Based on these achievements, we will accelerate further growth under the sixth 5-year business plan between FY 2026 and FY 2030. Next, we will explain the sixth midterm business plan. Please turn to Slide 51. We have set forth our 2035 vision as becoming a trusted health care innovator, transforming the lives of people through our science and technology. The next slide shows the positioning of the sixth midterm business plan toward the realization of Vision 2035. Please turn to Slide 53. Under the fifth midterm business plan, we transformed into an oncology-focused company and achieved continuous growth.

In light of this progress by 2030, the final year of our sixth midterm management plan, we aim to become an advanced global health care company that contributes to the sustainable development of society. The sixth midterm business plan covering FY 2026 through FY 2030 aims to expand the oncology business through the establishment of an efficient and resilient organization while also advancing the identification of breakthrough generating technologies or BGTs as new drug discovery technologies for sustainable growth, thereby driving toward the realization of our Vision 2035, a trusted health care innovator.

By 2035, we aim to become a global top 5 company in the oncology field with the new BGTs following DXd ADCs contributing to our business while establishing an efficient and resilient organization and becoming a trusted partner. Please turn to Slide 54. This slide provides an overview of the quantitative targets and strategies for achieving our 2030 goals.

First, let me explain our quantitative targets for FY 2030. We're targeting revenue of more than JPY 3 trillion, operating profit of more than JPY 600 billion and EPS of more than JPY 260. During the period of the sixth midterm business plan, we will maintain progressive dividends and provide annual dividends with an adjusted DOE of 10% or higher.

Next, I will explain the strategies for achieving the sixth midterm business plan and its quantitative targets. The first strategy is be a global top 5 oncology company by 2035, leveraging the strength over DXd ADCs. We aim to become a global top 5 company in oncology by 2035. To achieve this goal, we will launch multiple products and indications without delay, thereby providing new treatment options to more patients while also establishing the capabilities required to independently develop and commercialize products on our own.

The second strategy is identify next BGTs by 2030. To achieve sustainable growth even after the LOE of DXd ADCs and to deliver products that go beyond current standards of care to patients, we will identify multiple BGTs by 2030.

In addition, as a foundation for steadily executing these 2 strategies, we will enhance our profit-generating capability through operational excellence. Furthermore, we will strengthen value creation for diverse stakeholders and enhance our corporate value as a trusted partner.

Please turn to Slide 55. From here, we will explain be a global top 5 oncology company. Looking toward 2035, our oncology business aims to provide innovative treatments that bring cancer care one step closer to a cure for patients with serious diseases around the world as well as provide new treatment options through personalized medicine to patients, who have not achieved sufficient therapeutic benefit with conventional treatment and by delivering high-value information to health care professionals, we aim to provide medicines to more than 700,000 target patients annually.

By expanding our pipeline and business and growing into a global top 5 oncology company, we will be able to provide better treatment options to as many patients as possible, thereby realizing our Vision 2035 of becoming a trusted health care innovator.

Please turn to Slide 56. Through strategic collaborations with AstraZeneca and Merck in the United States, our oncology business has achieved significant growth. Through obtaining more than 10 indications for oncology products such as ENHERTU and DATROWAY across more than 95 countries and regions. We have secured more than 270 reimbursement approvals in total, enabling us to deliver medicines to more than 240,000 patients.

In addition to expanding through new product launches and additional indications, we have proactively invested in delivering medicines to a greater number of patients through evidence generation in real-world clinical practice, including more than 400 cumulative studies generating real-world data and the publication of over 100 papers annually.

Please turn to Slide 57. Our oncology business grew to revenue of JPY 954 billion in FY 2025. Under our growth strategy, ENHERTU and DATROWAY will continue to drive revenue growth over the next 5 years with the aim of achieving oncology revenue of more than JPY 2.3 trillion by FY 2030.

In addition, we will maintain a competitive pipeline and build the capabilities to independently develop and commercialize products in order to maximize their value, thereby achieving sustainable growth in the future.

Next, the following slide explains how we will build these in-house capabilities. Please turn to Slide 58. Our in-house capabilities will be built upon 3 pillars: R&D excellence to support development activities, business excellence to drive commercialization and an optimized global supply chain.

First, under R&D excellence, we will establish independent development capabilities aligned with pipeline progress by improving development speed through optimization of clinical development processes. In addition, we will leverage technologies such as digital pathology to improve the probability of clinical trial success. We will also promote efficient R&D through the use of AI and digital technologies.

Next, under business excellence. We will rapidly launch multiple products and indications in order to maximize product value. We plan to launch more than 20 indications over the next 5 years, and we'll deliver them to patients without delay following regulatory approvals. In addition, through the continuous generation of evidence, we will provide high-value information and secure long-term product value through pricing and reimbursement strategies. Through these initiatives, we will maintain and expand our leadership in the breast cancer field, while also establishing a strong leadership position in the lung cancer field.

To support and realize this business growth, we will optimize our global supply chain and build a flexible and stable supply system. As introduced at the recent briefing, based on lessons learned from our past experience, we have revised our strategy to optimize the roles of both our in-house manufacturing capabilities and CMOs.

Through this approach, we will secure appropriate capacity over the medium to long term, ensure a stable supply of our expanded ADC portfolio, enable the rapid launch of BGT candidate assets under development and reduce future manufacturing and supply-related risks. Under this new strategic direction, we will build a business foundation that is resilient to changes in the external environment and strive to achieve sustainable growth.

Now let me move to the next slide and discuss in more detail, how we are building R&D excellence. Please turn to Slide 59. In order to build development capabilities at the level of a global top 5 oncology company, improving development speed is essential. With ENHERTU, the period from first-in-human clinical entry to initial approval was achieved in 4 years and 3 months, representing 1 of the fastest approval time lines ever achieved globally. To replicate the highly competitive approval speed achieved with ENHERTU, for our subsequent in-house pipeline asset, we will shorten the time line from nonclinical development to clinical entry and further streamline each process in clinical development.

As a specific initiative, the first is the establishment of a clinical trial network. We have already partnered with more than 20 highly experienced clinical trial sites across over 10 countries and regions, building a global network for conducting Phase I trials. We will continue to actively expand these partnerships and accelerate first-in-human studies.

In addition, these Phase I trial sites will share their experience in drug administration and adverse event management with late-stage trial sites around the world with the aim of accelerating patient enrollment and improving trial quality.

The second initiative is the utilization of digital technologies and AI. We will leverage digital technologies and AI for biomarker discovery and research as well as for analysis and utilization of the vast amount of data accumulated internally as well as for improving efficiency in protocol development and site selection, thereby enhancing efficiency through the use of digital technologies and AI across various R&D processes and accelerating the overall development process.

Next, we will explain business excellence. Please turn to Slide 60. We will continue to make R&D investments actively for DXd ADC products. More than 20 pivotal studies, data readouts are expected over the next 5 years. To grow our oncology business, after obtaining approval of many indications, and we need to launch the products rapidly across the world, including biomarker diagnosis, and we need to realize rapid market penetration for products. Throughout the product life cycle, we will develop pricing and reimbursement strategy from global perspectives.

We will also generate data and evidence continuously to secure long-term product value and aim to maximize product value.

Please turn to Page 61. I mentioned that more than 20 pivotal studies data readouts are expected over the next 5 years. We are assuming that $2 billion to $6 billion total peak sales potential readouts will continue every year for the next 5 years. From 2026 to FY 2030, this is going to occur every year to contribute to the sales growth. By continuing to invest actively in R&D and delivering new data, we will contribute to more patients.

Please turn to Page 62. Through indication expansions for ENHERTU and DATROWAY, we have established a leadership position in breast cancer. Both products, we are implementing more clinical studies to expand their indications. In each treatment stage, we will contribute to more patients with breast cancer. Also in lung cancer, we already obtained indications with ENHERTU and DATROWAY, especially for DATROWAY 10 Phase III studies are ongoing right now. We will promote biomarker research and exploration, identify target patients to deliver the drug appropriately so that we can build leadership in lung cancer as well.

Please turn to Page 63. We believe that our DXd ADC business is growing substantially with peak sales potential of JPY 3 trillion or more. We will not only invest in the 5 DXd ADCs where we are collaborating with our partners, but also invest actively in DS-3939 and DS-3790, et cetera. In early development with blockbuster potential, we will aim to maximize the value of our ADC portfolio, including LCM strategies such as indication expansions.

Furthermore, to realize sustainable growth, we will identify multiple next BGTs with potential to match that of DXd ADCs by the year 2030. These promising pipeline assets, we will aim to be a Global Top 5 Oncology Company by 2035 and deliver our medicines to more than 700,000 patients around the world each year.

On the next page, I will explain identify next BGTs. Please turn to Page 64. We define BGT breakthrough generating technology, Daiichi Sankyo's proprietary innovative technology to deliver more innovative medicines to patients faster. Based on this proprietary drug discovery technology, we will advance research and development in multiple diseases and turn this into a platform. First, we will generate multiple drug candidates through innovative technologies to transform standard of care. We will then leverage clinically validated technologies to the next programs to build a high probability portfolio.

Then, we will establish end-to-end integrated capabilities from research and development to manufacturing, to accelerate delivery of new innovative medicines to patients. DXd ADCs are good successful examples. Clinically validated technologies are being leveraged in the next programs. By now, ENHERTU and DATROWAY already launched and 5 others are in development stage. Identify the next BGT programs is going to be our target during the sixth 5-year business plan.

Please turn to Page 65. On this page, I will talk about 3 modalities as ADC-based BGT candidates. First, ADC using cytotoxic payloads. As a leading Topo 1 inhibitor innovator, we will leverage our knowledge and clinical insights accumulated so far to develop next-generation cytotoxic payloads to overcome cancer with DXd ADC resistance. We are planning to start Phase I study for ADC with new payloads in FY 2027.

Next, ADC with IO payloads. By activating the immune system via the STING pathway, we are hoping to drive tumor cell elimination and improve long-term treatment results based on immune memory. As an ADC of this type, DS3610 study is ongoing.

Next, antibody engineered ADC. Through novel tumor-selective antibody engineering technologies, we will aim to improve benefit risk balance. We will develop new drugs through combinations with diverse ADC technologies we have. For this type of ADC, we are planning to start the first Phase I study in FY 2027.

Please turn to Page 66. Here, I will talk about 3 non-ADC BGT candidates from multi-modality research. First, as an advancement in antibody engineering, we are developing multi-specific antibodies. One example is T cell engagers. As our in-house product DS2243 Phase I study is ongoing. We will explore new technology and biology through integration with IO and ADC technologies.

Next, as a high-value chemical modality, I will explain targeted protein degradation, TPD molecules. This modality will not inhibit protein functions but degrade target proteins themselves, enabling access to previously undruggable targets. This will accelerate TPD molecule creation with higher precision by integrating our long-standing medicinal chemistry with AI drug discovery. As we mentioned in previous results announcement briefing sessions, DS-9051 Phase I study is ongoing right now.

Last but not the least, siRNA as a culmination of years of research in nucleic acid therapeutics, we have leveraged decades of our nucleic acid expertise such as research on DAICHIRONA. By integrating novel chemical modification technologies with DDS technologies, we will create nucleic acid therapies targeting multiple organs. We plan to start Phase I study for the first program by the end of FY 2026.

On Page 67, I will introduce our programs in immuno-oncology. As is shown in this figure, we are broadly researching key mechanism of cancer immunology. In each step, we identify promising assets. At present, many Phase I studies are ongoing. By 2030, we're expecting clinical signals from these assets. Furthermore, with combination therapies with in-house and external compounds, we will aim to enhance the value of our IO assets.

Please turn to Page 68. During the fifth 5-year business plan up to FY 2025 through DXd ADCs positioned as the first BGT. We achieved expansion of our business and presence in oncology. For DXd ADCs also during the sixth 5-year business plan period, multiple data readouts from large-scale clinical trials are expected, leading to indication expansions. In addition, from the 6 BGT candidates I talked about today as well as IO breakthrough assets, we will identify promising growth pillars for DXd ADCs and aim to unlock greater business potential.

Please turn to Page 69. This slide introduces the expansion of our drug discovery research platform that supports the continuous creation of BGTs. Through 3 perspectives: expansion of the research capabilities at the Shinagawa Research Center, Research DX and Open Innovation, we will create an environment that enables us to leverage our craftsmanship more effectively than ever before. A new research building in Shinagawa is scheduled for completion by the end of 2027, and we will also strengthen talent acquisition.

In addition, DX initiatives in the research field are also advancing and the data-driven drug discovery project that had previously focused mainly on small molecules, can now be applied to multi-modality research. We will continue to leverage AI to improve the efficiency of drug discovery. Regarding open innovation in addition to establishing 3 research institutes in Europe and the U.S., we plan to further strengthen our initiatives.

Please turn to Slide 70. Here, as examples of the outcomes of our science and technology, we would like to introduce some of out-licensed compounds currently being developed by other companies. These innovative assets are reaching clinical practice through licensing partnership, taletrectinib is currently the most successful example among our out-licensed assets, contributing to the treatment of patients with ROS1-positive non-small cell lung cancer in the U.S., Japan and other countries.

The growth of these out-licensed assets demonstrate the strength of our science and technology capabilities and gives us confidence that we can identify the next generation of BGT candidates based on our drug discovery capabilities. In addition, with respect to these assets, we expect to receive milestone payments and running royalties based on the respective agreements. Next, I will discuss operational excellence, which serves as the business foundation supporting our 2 strategies be a global top 5 oncology company and identify next BGTs.

Please turn to Slide 71. In April, we established a new business transformation organization directly under the CEO. By implementing company-wide operational excellence initiatives over the next 5 years, we will optimize our cost structure and strengthen our profit-generating capabilities. As a specific initiatives, we will expand the scope beyond routine tasks to include non-routine operations and improve operational efficiency globally through the use of both general purpose and specialized AI.

At the same time, for human resource free from conventional tasks through these efficiency gains, we will formulate and execute HR strategies that combine capability transformation through reskilling with optimal talent allocation, thereby advancing talent allocation from the company-wide optimization perspective.

In addition, we will further reduce costs by optimizing our procurement processes through the global common ERP platform that has been rolled out sequentially across regions since last fiscal year.

Through the execution of these operational excellence initiatives, we aim to optimize costs by a cumulative total of more than JPY 200 billion over the 5-year period of the sixth midterm business plan, thereby enhancing our profit-generating capabilities and utilizing these gains for future growth investments and improved profitability.

Please turn to Slide 72. Commercialization to achieve a strong and sustainable growth, we will establish a new global organization responsible for centrally overseeing commercialization activities across all countries and regions, spanning the entire oncology and specialty innovative medicines business, including marketing, medical affairs and market access. In addition, we will create the position of Chief Commercialization Officer to lead this organization.

This will enable us not only to execute our global activities with greater speed and consistency, but also to advance resource allocation and business investment decisions based on strategic priorities including optimization of organization structures and personnel. This organization is scheduled to become operational in April 2027.

Please turn to Slide 73. This slide explains that alongside operational excellence, another foundation supporting the sustainable growth of business is to be a trusted partner for sustainable society. To maximize our business value, it is essential that we meet the expectation of diverse stakeholders and continue to be a trusted partner. And we believe these ongoing efforts will contribute to a sustainable society.

To enable our employees to fully realize their potential, we will foster a culture of patient centricity, thereby creating and delivering medicines that contribute to patients while also fulfilling our commitment to contributing to the medical community based on high ethical standards and providing patients and their families with confidence and safety.

Furthermore, as our business continues to expand, we will work to reduce environmental impact across the entire value chain and fulfill our responsibilities as a corporation. Through these initiatives, we will contribute to diverse stakeholders, including patients and their families and work toward the realization of a sustainable society.

From the next slide, we will explain our cash allocation and shareholder return policy. Please turn to Slide 74. Our cash allocation policy emphasizes a balance between growth investments and shareholder returns. During the period of the sixth midterm business plan, as growth investments, we will expand the oncology business while prioritizing our R&D and capital expenditures, aimed to identifying new BGTs for sustainable growth.

For shareholder returns, we will introduce progressive dividends and provide stable dividend payouts. Operating cash flow before deduction of R&D expenses over the 5-year period is expected to total approximately JPY 3.85 trillion, which together with proceeds from asset sales and financing activities will serve as the source of the funds.

Of this amount, approximately JPY 2.9 trillion will be allocated to R&D expenses, while approximately JPY 700 billion will be allocated to capital investments, primarily for strengthening the global ADC supplying network and enhancing research infrastructure.

In addition, we will make agile strategic investment, including acquisition of external assets and capabilities to support sustainable growth beyond the mid-2030s. With regards to shareholder returns, we will introduce a progressive dividend policy and prioritize stable dividend payments while considering flexible share repurchases, depending on the circumstances.

Please turn to Slide 75. This slide illustrates our shareholder return policy and the outlook for annual dividends. The annual dividend was JPY 27 in FY 2021 when the fifth midterm business plan began and has increased to JPY 78 in FY 2025 as we have continued to provide stable shareholder returns in line with profit growth. During the period of the sixth midterm business plan, we will introduce a progressive dividend policy and maintain an adjusted DOE of 10% or higher each year as a key indicator while continuing to provide stable shareholder returns through dividends.

For FY 2026, we plan to increase the annual dividend per share by JPY 22 to JPY 100. Next, I will discuss our quantitative target for FY 2030 and the outlook towards FY 2035. Please turn to Slide 76. Looking toward FY 2030, in addition to challenges such as the loss of exclusivity for Lixiana, the completion of ENHERTU sales milestone receipts and declining revenue from the Iron business, we will also face revenue reduction impacts from the transfer of Daiichi Sankyo Healthcare beginning in FY 2027. However, through the steady execution of the strategies outlined today in our sixth midterm business plan, along with maximizing the value of our DXd ADCs portfolio centered on ENHERTU and DATROWAY, we expect continued revenue growth throughout the plan period and aim to achieve revenue of more than JPY 3 trillion in FY 2030.

On the profit side, while multiple challenges will converge in FY 2027, the transfer of Daiichi Sankyo Healthcare is expected to offset these impacts at the operating profit level. Furthermore, in addition to sustainable growth driven by maximizing the value of our DXd ADCs portfolio, we will strengthen our earnings-generating capabilities through operational excellence. As a result, we aim to significantly accelerate profit growth by FY 2030, targeting operating profit of more than JPY 600 billion and EPS of more than JPY 260.

In addition, by implementing a progressive dividend policy and maintaining an adjusted DOE of 10% or higher each fiscal year, we will pursue more stable dividend and further enhance shareholder returns. R&D expenses are planned to increase gradually. And during the sixth midterm business plan period, we will invest approximately JPY 2.9 trillion, an increase of about JPY 1 trillion compared with the fifth midterm business plan period as a source of medium- to long-term growth. At the same time, through rigorous project prioritization and portfolio management, we will keep the growth rate of R&D expenses below the rate of revenue growth, with the R&D to revenue ratio expected to be approximately 20% in FY 2030.

We have incorporated certain assumptions regarding the impact of MFN. As for tariffs, we currently believe that their impact on business performance during the period of the sixth midterm business plan will be limited, although we will continue to closely monitor policy developments going forward. To realize our Vision 2035, we aim to overcome the patent expiry of ENHERTU, while maximizing the value of DXd ADCs and driving business contributions from new BGTs that follow DXd ADCs, thereby positioning ourselves to target operating profit on the scale of JPY 1 trillion in the early 2030s.

To achieve this, we will the leverage the oncology expertise to cultivate it through our collaborations with AstraZeneca and Merck and strengthen our capabilities to independently develop and commercialize our industry-leading pipeline backed by our science and technology, thereby enhancing our future earnings generating potential.

Finally, let me conclude with the summary. Please turn to Slide 77. So today, based on a review of the fifth midterm business plan, we explained the sixth midterm business plan aimed to realizing our Vision 2035, which defines where we aspire to be in 10 years. The sixth midterm business plan is a critical plan that will enable us to move into the growth as a future global top 5 oncology company. We will view the rapidly changing business environment as an opportunity. And by combining the strength, we have built over time with new challenges.

We will realize sustainable value creation and contribute to the development of a sustainable society as we grow into an advanced global health care company. We look forward to your continued support and expectations for our future growth. This concludes my presentation.

[interpreted]

[Operator Instructions]

First Mr. Yamaguchi from Citigroup Securities, please.

[interpreted] can you hear me?

Yes, we can hear you.

[interpreted]

Yamaguchi from Citigroup Securities. My first question is about the 5-year business plan and also the FY 2026 forecast. So it's in between the 2. So maybe the question goes to Kodama-san. Regarding CMO compensation fee, on Friday, last week, there was presentation, so you said that there can be a provision also for FY 2026, you mentioned this is for 2028. Until when this will continue, that's something I'd like to know. It's not included in the 5-year business plan figures. CMO compensation fees will continue until when, although the amount is going to decline over time. So could you explain?

[interpreted] Thank you for your question. So I'd like to respond. Your question is about CMO compensation fees. In FY 2026, JPY 80 billion is included. How much or how long this is going to continue? So you need some guidance on this. According to my understanding, regarding the contracts with CMOs, there are multiple contracts. Longer ones would be up to FY 2030 or up to the mid-2030s. For specific details, I'd like to refrain from commenting in detail, so as a range you can check this kind of a duration.

Regarding the amount and the size, as we communicated on Friday last week, over time, the various measures are going to turn effective. So this year, in FY 2026, JPY 80 billion is planned and the amount is going to decline over time. In the 5-year business plan, it's only for 2030 -- up to 2030. But based on assumptions, we have certain figures, we incorporated it for our assumptions. So if you say certain, it's incorporated.

[interpreted] Understood. And the second point, I'm going to focus on the natural waste. So this number for this year is very robust, TNBC alone. So in the mid to long term this number, you will not be able to give us the specific figure, but it's indicated from here that, DATROWAY, I would assume that, that is the biggest contribution. AVANZAR included. How that's going to come into this assumption for this year and the mid- to long term? I would like to ask for your take on the situation.

[interpreted]

Thank you for your question. So DATROWAY and the numbers. So for us, we do have for the adjustment based on the adjustment of risk -- so including -- and there are such readout of the outcomes for other studies and have been incorporated into the numbers. So TNBC alone have been factored into this as the assumption as a new indication. Is my understanding correct? So yes, for these numbers, Ken would like to explain.

Thank you for the question. So as we look at the fiscal '26 expectations and the sixth midterm plan, we do assume that the triple-negative breast cancer indication will be approved. As you know, the data was reported. It is highly differentiated. We expect that when it is approved and the PDUFA date in the U.S. is pretty soon. It's in May. Everything we're hearing from the oncology community leaves us very confident that the doubling of overall response rate and the fact that it improved overall survival, physicians are waiting for this drug enthusiastically. And so we expect it will do very, very well.

[interpreted]

Next question, UBS Securities, Mr. Sakai, please, from UBS.

[interpreted]

Sakai from UBS. On Page 74, I have a question on that. There are many things I'd like to ask you on this page. Regarding the dividend, adjusted DOE, 10%. This is a question to Kodama-san Instead of share buyback, why you're going to use DOE with dividends. There's no signaling of undervalue for the stock price? If you add these figures, it's already JPY 3.9 billion. Are you going to do factoring? That's my first question to you.

[interpreted] Thank you for your question. Page 74, regarding the dividends and shareholder return, you'd like to know our way of thinking and fundraising philosophy, is also part of the question regarding shareholder return, acquisition of our own shares and dividends, how we're going to do this using the two for the time being during the sixth 5-year business plan, we'd like to ensure profit generation, and we have commitments to this, and we also need to have confidence. From the profit, we'd like to pay dividends to return to shareholders. That's why we are doing this adjusted DOE. This time, it's adjusted DOE from the fifth 5-year business plan, DOE is being used as an indicator. So we will continue to do so.

As for the progressive dividends, you can see this progressive dividend. In the fifth 5-year business plan, we paid dividends along with the profit increase. So we will continue to do this. As for the share buyback -- this is -- will depend on the status of capital and also the size of the business. Given that situation, our working capital is substantially increasing right now. So we have to check the balance. If the situation is appropriate for share buyback in terms of the capital, then we'd like to consider this possibility more actively.

And also fundraising, you have calculated and you're right. If you add up the left and the right, the right-hand side is going to be bigger. So compared to -- in addition to asset sales, we will also do this for fundraising. You mentioned factoring. We are not considering this possibility more specifically, but we'd like to study and research broadly. If there is an appropriate things, we'd like to work on that as well.

[interpreted] My second question. So on Slide 76, I'd like to direct your question to Mr. Kodama. So you're going to accelerate this. So by R&D, JPY 600 billion or so as it is written here. So I would assume that SG&A is going to be reduced tremendously and OP JPY 600 billion will be achieved. Is my understanding correct? And if that's the case, so how would be the driver for this robustness of this acceleration. So now forecasting governance is in check, although you're not -- do not have the U.S. GAAP.

[interpreted] So for the profit and this building a robust foundation for profit growth and to sharply accelerate profit growth in FY 2030. So your question was about the rationale about this. So to deduct the expense from the revenue. And we're going towards 2030, so to improve our profit -- but rather, it's going to be increase in revenue. So the balance will be skewed toward the latter. And as for the expense, so for the business transformation, which we have talked about, the size of JPY 200 billion to reduce that expense have been factored into this. So on average, this isn't something that would be generated every year. It's going to be skewed toward the end of the 2030.

[interpreted]

Next question from Mr. Hashiguchi from Daiwa Securities, please.

[interpreted]

Hashiguchi from Daiwa Securities. My question goes to Mr. Okuzawa or somebody you think is appropriate. On Page 63. DXd ADC, potential will be JPY 3 trillion or more next BGT. With potential to match that of DXd ADC, anything you can say so will be identified by 2030, you'd like to identify multiple BGTs by then had entered clinical studies, if my memory is correct, it was around 2015.

You have been able to say that it had this much potential. But the around the start of the fifth 5-year business plan like 2020, at the earliest point, you might have took longer than that. It might have taken more than 5 years. If I calculate based on this, you talked about multiple BGT candidates today. But they haven't entered the clinical stage yet, Phase 1 in 2027, then the likelihood may be very low to reach that goal by 2030. Those are already in the clinical stage, must have very strong signals. Otherwise, they would not be able to have the potential to match that of DXd-ADC by 2030, it can be difficult.

Is understanding correct or wrong? If there is anything with such strong signals, I'd like to have some comments from you.

[interpreted] Hashiguchi-san, thank you very much. In the sixth 5-year business plan, a major strategic pillar is to identify multiple BGTs as we mentioned. So thank you for your question on this. Global Research Head of R&D, is going to respond.

[interpreted]

Hashiguchi-san, thank you for your question. As you said, DXd ADCs where I was involved in research since 2010, we started research from 2010 and 2015, Phase I started. In 2019, approval was granted. So we created the oncology business as such. Today, we presented on the 6 technologies. In the fifth 5-year business plan, there was a lot of growth there. We filed for patents and development candidates and are prepared -- multiple of them are being prepared by now.

Sorry for my long answer, but we took this approach in [indiscernible], when he was still here, DXd ADC successful expenses use basis are to proceed with BGT approach. So we are making good results based on that. The timing to contribute to a business in 2030, we don't think we can achieve it in 2030 yet. If I explain by 2030, [indiscernible] mentioned strong signals. We are going to identify strong signals and multiple BGTs will be identified. So that's the goal setting shown on the right.

So by 2030, we will identify these BGT candidates. And these groups of assets will enter into 2035 to flourish. So that's the timing. The left is the DXd ADC business will grow and the new drug assets will generate new business. So that's the nature of our R&D strategy. Did I answer your question?

[interpreted] Thank you very much. So the second part of my question is that the plan for the R&D costs, so for this time, so as it was presented in the Fridays, briefing. So you have factored in such risk. So that has been embedded into the plan. And as for the sales. So PDUFA is in scope for this. And depending on the data that may be published, so where would be the focus for R&D? So we -- I would assume that we need to be very flexible. So your midterm plan and with regards to R&D. So there has been such discrepancies. So in all likelihood, is there a possibility for such inconsistency there. So what is the basis for this R&D? So JPY 600 billion or JPY 2.9 trillion, how did these figures come out?

[interpreted] So R&D cost management. So John would like to respond to that.

Thank you for your question regarding the spends on R&D. As Abe-san outlined, we will have a number of identified BGTs moving forward. The specific spends for the R&D expenses have not yet been fully determined, but obviously, if we move forward with a number of promising BGTs, this will be the expenses that are incurred in order for us to achieve the goals. So we're looking forward to the promising agents that are moving forward, and those are the plans that we have in place with the costs associated with moving these BGTs forward.

[interpreted]

Next question from BoA Securities. Mamegano-san, please. Next, SMBC Nikko Securities Wada-san. please?

[interpreted] Wada from Nikko Securities. I have a question on the 5-year business plan. First of all in FY 2025, core operating profit before R&D was below 40%. What's the reason why in the next 5-year business plan, what would be the factors for you to achieve 40%. And also core operating profit and operating profit, you changed the focus. And what's the reason behind.

[interpreted] Thank you for your question . First, FY 2025 core operating profit ratio under 40%. And what are the factors behind? And number 2, KPI for the fifth -- sixth 5-year business plan. What's the background for changing from core operating profit to operating profit?

First, FY 2025, core operating profit ratio before R&D below 40%. Why was your question? Cost of goods sold in the second quarter. ENHERTU associated write-down of inventories were incurred losses. And DAICHIRONA also had write-downs of inventories. So this is what we didn't expect initially, and there was an increase in expenses, and that's a major reason I can mention.

And also, secondly, in the sixth 5-year business plan are the change of our KPIs. Operating profit ratio before R&D target is 40% in the fifth 5-year business plan, by having this target, we've focused on the improvement of the profit margin, and we showed some effect and it played a certain role to play.

When you look at the sixth 5-year business plan in our business, DXd ADCs, specifically, ENHERTU/DATROWAY 3 products, we are working together with Merck, U.S. Merck and the proportion of this product is getting larger. As you know, regarding the fly products, profit share is a mechanism for collaboration. So in terms of the profit ratio, there are some difficulties.

And secondly, in the end, profit for the term and the operating profit towards that goal for various elements included, we have to secure profits. We should focus more on these. So noncore items as well, we decided to look at them as the responsibility of the management team. So we decided to use the operating profit as an indicator or KPI.

[interpreted] On Page 65 and 66, there was a summary. You have uniqueness here. IO payload, I think, is unique. STING agonist is the topic of my question.

[interpreted] So this ligand has not been overcome. So if you bind with the antibody, you will be able to maintain this. So then there may be such ability -- improve the salability of the compound. I would like to ask you to elaborate about the property.

Yes, exactly the point. So STING, so ADCs, what we have been able to accomplish this. So how it is going to be bind by that and also how to control the solubility. And with our very stable ADCs and those discharged drug works for the betterment. And as for the detailed property, our policy is not being able to explain in this detail. But for us to overcome this, and this is the IOADCs.

[interpreted]

Next question is from Tony Ren-san, Macquarie.

Perfect. My first question is about the CMO compensation. That's probably to either Okuzawa-san or Kodama-san, the CMO compensation fee, you guys booked this year, JPY 169.5 billion, roughly about a little over USD 1 billion. This is really very large. We -- I happen to cover several CDMOs myself, including ones that are specializing antibody-drug conjugates. They said, my contacts in the industry tell me that this basically is equivalent to canceling contracts on drug sales of roughly about JPY 850 billion or roughly about USD 5.4 billion.

So I just want to understand why are we looking at such large CMO compensation, especially given what Lonza said last Friday, right, last Friday during their first quarter briefing, they said that they do not expect much cancellation fee this year, so that's my first question.

[interpreted]

Thank you for your question. FY 2025 results, we booked the provision for CMO compensation fees. And you are asking a question about the size of this amount. On Friday last week, we explained, so I may be repeating myself regarding CMO compensation fee and the provision for that initially, according to initial expectations, we had a demand forecast. And we can deliver the products to all patients.

And we thought that was the size needed to deliver the products to all patients. So that's why we concluded the contract. In order to achieve our targets and goals, a sufficient amount and high-quality CMO lines must be secured, so long-term commitments. -- and contracts were signed with long-term commitments.

For example, the results of the past clinical studies and future forecast, including risk adjustment, all the studies may not be successful. So we factored in such a reality in the supply plan and variances are occurring. So that's the factor behind. Therefore, regarding the size of the amount, you talked about it. Allow me to refrain from talking about the details here, but our demand of plan, we expected before, and the current estimate have differences and variances. So I hope you understand our situation.

I understand very well. My second question is either to Abe-san or John. This is about your siRNA platform. Can you tell us a little bit about your siRNA platform? Would it be hepatic delivery of siRNA? Would it be extrahepatic, what type of molecular targets would you be looking for -- looking at, what diseases or indications are you exploring?

[interpreted]

Thank you very much for your question. SiRNA and the research, I believe your question is related to that. And this time, what we have presented to you these -- 1 of the 3 BGT candidate on Slide 66. So this is -- we have multiple BGTs for development candidate. Today, we will not be able to tell you about the targeted disease. But other than oncology, we are going to -- we would like to fulfill this. And so hepatic or non-hepatic you have asked the question.

So including hepatic and nonhepatic for targeting multiple organs. So siRNA, we would certainly like to deliver, and we have been engaging in a series of development, we have been able to advance this. So therefore, we have been able to identify multiple candidate compound. And we -- as we have been doing this when we conduct the Phase I trial. So we would like to explain to you once we get to that -- so siRNA, we are hoping and we have high expectation to fulfill this trajectory. I hope that answers to your question.

[interpreted] Mr. Wakao from JPMorgan Securities.

[interpreted] Wakao from JPMorgan Securities. I also have 2 questions. First, in order to achieve more than JPY 3 trillion in 2030, what is going to be needed. According to my understanding, [indiscernible] lung cancer success is a prerequisite. AVANZAR, T-L07, T-L08, and also 15 as well. Main is T-L07, T-L08, and Avanzar studies, which 1 -- how many of these studies should be successful for you to achieve your goal?

Avanzar may be successful, T-L07, T-L08 successful, that would be the best scenario. Avanzar may not be successful. So T-L07 may be successful. So which 1 should be successful for you to achieve this goal?

And as of now, you don't have the data yet. It's going to be risk adjusted. But incorporating this means that you are very confident you feel confident. And any data we haven't seen yet, although you may have such data in the background Avanzar, T-L07, T-L08, similar to T-L02, T-L04. Are you seeing updates which are not published yet? And are you increasing confidence? Sorry for my long question.

In addition, you want to build lung cancer leadership. That's a very high hurdle to clear because Merck [indiscernible] is 1 competitor, Pfizer has ADCs. Biospecics antibodies are being developed by several companies. So -- why -- you're confident about TROP-2 antibody. I want to know, based on the competitive landscape. That's my first question to you.

[interpreted] Wakao-san, thank you very much. It's broader question, which was the topic, Ken and John are going to respond, Ken first, please.

Thank you very much for the question. So I'll put my answer in context to what our CEO, Okuzawa showed earlier. We've got over 20 pivotal trials that are going to read out over the next few years. And that provides us with many, many shots on goals to help patients and to hit that $3 trillion target.

When we specifically look at DATROWAY, it's important to remember that AVANZAR is just 1 of 4 first-line non-small cell lung cancer trials. So AVANZAR will be the first 1 to read out -- but then we've got T-LO7, as you mentioned, T-LO8 and T-L10. And so when we look at the first-line opportunity, which is very, very large. It's 1 of the largest in all of oncology, very high unmet need.

We've got at least 4 opportunities to help these patients -- so delivering on our target, it's not contingent on any single study. AVANZAR could fail. These others could work, and we will be very confident in our ability to deliver on this forecast.

Just to add on to Ken's comments regarding the advancements that we've made in the lung space. We've made a lot of and gained a lot of understanding from the previous studies that we've conducted and we've been able to use the results of those studies to be able to design the further upcoming studies.

So for example, from TROPION-Lung01, what we saw was that in the non-squamous population, we had a doubling of the overall response rate for that specific population and even further, what we were able to do is demonstrate prolonged duration of response and have meaningful response -- meaningful improvement in progression-free survival.

We were able to incorporate those learnings for the AVANZAR study and also based on that, what we were able to do was to advance further and to incorporate the biomarker, which is the TROP2 biomarker. This gives us the confidence from AVANZAR. Now obviously, these are hypotheses, and this is what experiments do is to be able to test these hypotheses based on knowledge that we have.

Think one of the insights that you asked was do we have any additional insights based on our confidence we've not seen any further data. We have no further data because what we have is we share all the information that we have with you. But we are confident based on what we know, and these are the reasons why we test these experiments. And as Ken said, we have a number of first-line studies that will allow us to test these experiments to hopefully get positive readouts.

[interpreted] [indiscernible] not available for you, and you haven't seen it yet understood. So for the second point, I would like you to tell us about the 5-year ahead over time and our visibility there and perhaps relating to JPMorgan's question, so then there is a bottom for 2027. Is my understanding correct? So 2027 or I believe for the full year impact, 2028. So I believe that 2027 does not necessarily be the bottom. So 2027 would be the bottom. Is my understanding correct? And if not 2027 and 2028, if it is going to be impacting the profit, do you have any plan B or any other options to support that?

[interpreted] Thank you very much for your questions. So I know the back in January conference, I did talk about that. I know that that's all the reasons why it come to this question. So this 2027, it is very challenging. We are very much aware of that in terms of our forecast.

So to that end, so ENHERTU, a milestone, so no further sales milestones for ENHERTU. That will give us a will be impacted tremendously and also milestones close to JPY 100 billion. So that would straightforwardly impacting the bottom line. So, so against the backdrop for OP slightly decline. This is for 2027 for core OP and also divestment of Daiichi Sankyo Healthcare.

So conversely, this would be recognized in 2027 as a profit. So by looking at this operating profit, so conversely, core OP drops, and we'll be able to supplement for the losses. As we you have put it, the Lixiana LOE, so in '28 or '29, we are going to be impacted by that.

Having said that, there are variabilities of the impact levels based on which region -- it may be so 2026, '27 by Europe by each respective countries LOE impact of Lixiana LOE may be impacted. Conversely, in Japan, there's a prolongment of the patent duration. So the impact in Japan in 2029 or after 2029, so including ASCA region, Lixiana LOE impact, so there are differences amongst the regions that also need to be factored in.

And that is going to be impacting us steadily and as our Kodama CEO have explained. So when it comes to our operational excellence, this is an all company effort for the past 5 years. So in this 5 years, we are going to put that at our forefront. And as the positive impact will be garnered toward the end of the 5-year plan. So therefore, after 2027, and '28 and '29, we can steadily recover the profits. And then we'll be able to make it very high, higher than JPY 3 trillion in 2030. Very understandable. So if that's the case, and so 2028, you do not have any plans to sell of other assets.

[interpreted] next, Matsubara-san from Nomura Securities, please.

[interpreted] Matsubara from Nomura Securities. My first question is about the cost reduction. JPY 200 billion in the 5 years, every year, it's going to be larger according to the earlier comment. Until you can achieve this, it will take time. What about the probability of achieving this goal?

[interpreted]Thank you for your question. We think there is a sufficient possibility that we can achieve this goal. -- and achieve the results. From FY '26, we had a global reorganization. One of the keys is the business transformation organization function, which is newly established. This is an organization directly under myself, as CEO. There are 2 major missions. First, from last fiscal year, in Europe, U.S. and Japan, one by one, Global One instance ERP is launched, one after another in these regions. ERP platform would be leveraged.

And globally, highly reliable data can be obtained from our data. So such as procurement, can handle what could not be done before optimization of procurement and purchasing globally can be implemented. And another thing is the leveraging AI and there is a progress day by day in AI, it's evolving and advancing. We have to capture this from the current fiscal year, we have a global project we are newly launching which you are planning to promote from now. We are going to start this from the current fiscal year.

So this is a new initiative and allocation of human resources and to enhance efficiency in our work is important and the capacity, which is freed, can be allocated to more advanced work. AI resources can be considered together with human resources to optimize the headcount as well. The sixth 5-year business plan, we want to achieve a big growth.

And regarding the talent demand in the conventional headcount plan, the human resources just increased gradually over time. But by leveraging AI effectively, headcount-wise. The quality of the work and the productivity of the work to be done by each person from both perspectives, we can make a dramatic change. So this is a new project. We try to achieve great results. So we have these 2 pillars to implement business transformation with high accuracy.

[interpreted]

So the second part of my question is for our strategy for sales. So what you have made a comment earlier about this 5 ADCs. And beyond that, it is going to be in-house sales any take on the situation, please?

[interpreted] So thank you for your question. So this time therapeutic area. So we have the oncology conventionally and also specialty. So we have 2 pillars. We have categorized them into 2 pillars, and then we have been designing our sales team as well. And in the fifth midterm, so in U.S. and Europe, so oncology team, we wanted to encompass those areas and thereby reinforcing our oncology unit. Accordingly, on the other hand, so discovery research team, not dedicated to this oncology alone. So therefore, in the sixth midterm. So some specialty to contribute to the business.

We do not foresee that. In the seventh midterm, we can for foresee and there's a potential for that in-house. So therefore, we have asset for oncology development and also the early-stage specialty assets. that resides in the 5 year for the sixth midterm. So we would like to have an incorporate into portfolio managemetn. So therefore, oncology and specialists as a sales team actually rolled out, respectively, but rather under the auspices of one Chief Commercial Officer to oversee the activities across the board.

Oncology or non-oncology and the values of the assets can be identified to optimize the portfolio. So this is what we like to consolidate this sales activities. And as we have put it beyond that point, the commercialization from our in-house that is certainly in the scope.

[interpreted] Others are still raising hands, but we are running over. So with this, we'd to close Daiichi Sankyo's FY 2025 financial results and 5-year business plan presentation and discussions. If you have further questions, please contact our IR team members. After this, from 10 minutes past 8, we will have Q&A of members of the media. Thank you very much for joining today.

[interpreted] Q&A session for members of the media.

I'm delighted to serve as MC for this Q&A. I'm Ogawa from Corporate Communication. [Operator Instructions].

Can you hear me?

Yes, we can hear you.

I'm Yasukawa from [indiscernible] newspaper. I have a question to CFO, Kodama-san. Regarding the financial forecast, operating profit and core operating profit are expected to grow both. Cost increase such as raw materials and distribution costs and personnel costs impact are already incorporated in here.

[interpreted] Thank you for your question. In FY 2026 forecast, cost increase impact is incorporated is the question. Recently, material costs are rising. And distribution costs including the geopolitical risks these days are part of the question according to my understanding. Right now, what could be possible as of now, and regarding such cost increases, we are incorporating them to a certain degree. But compared to other industries, such an impact would be relatively smaller compared to other industries.

[interpreted] Compared with other industries have less impact and my apologies for the follow-up question. So in that, what would be the biggest impact? So whether the energy costs and the personnel cost and the logistics cost, among others.

[interpreted]

Thank you for your question. So when it comes to the overseas operation, now it starts to expand [indiscernible] all the more and personnel costs and inflation costs. And also when it comes to the activities, those costs related to the operation globally have risen.

[indiscernible].

[interpreted] [indiscernible]

I have a question to Mr. Okuzawa, CEO. Looking at the stock price is now declining. What's your view, honestly, regarding the stock price level. And do you have any measures you're going to take to raise the stock price?

[interpreted] Thank you for the question. How to think about the stock price was a very a straight question from you. Of course, we are not satisfied with the current level of the share price. And our corporate value, we'd like to recover the stock price in line with the inherent corporate value. So to that end, the sixth 5-year business plan was presented today to you.

We have 2030 financial KPIs, top line, bottom line, specific targets and earnings per share and shareholder returns were explained and potential is going to go up in the form of share price. Why we think so, such a rationale is also being shown with this 5-year -- sixth 5-year business plan. So we will execute the sixth 5-year business plan to the full to increase the stock price. That's our determination.

[interpreted] So second part of the question, so this may -- this relate to the dividend and payout and the shareholder return. So DOE, adjusted DOE that you have put together. So as for the share buyback and the policy in the sixth 5-year business plan, what is your policy going forward?

[interpreted] So with regards to this shareholder return and as a mode of the fundamentals, so we are going to have progressive dividend and being on that level. So adjusted DOE with a target of 10% annually or more. So this is a progressive dividend. So to the shareholders and the investors. So in 5 years' time, the dividend, so JPY 100 serving as a basis for 2026 will stably risen. And I would hope that you can expect that stably.

As for the shareholder buyback -- share buyback, so that was also indicated in the fifth business plan. But -- and I would think that such flexible buyback will be considered at any given time. So as a policy of the shareholder return, so we are going to have this progressive dividend and DOE 10% adjusted DOE 10% or higher annually. So we would like to commit to this.

[interpreted] Next Kikuchi-san, please.

[interpreted]. Can you hear me?

Yes, we can hear you.

This is maybe a question to Okuzawa-san or John Tsai. The philosophy behind BGT, I'd like to know, sorry for the lack of my knowledge. Today, you talked about BGT candidates broadly. And there were a question from the analyst earlier. Until they become after products, it may take a long time according to the question. Any technologies or technological points which can be worth being mentioned as GPT -- BGT and how much profit they can generate potentially? Any view from you?

[interpreted]

Thank you for the question. First of all, to contribute to business during the sixth 5-year business plan and beyond 2030, there's going to be a business contribution, Abes-san anything to add?

[interpreted] Thank you for your question. Regarding BGTs, we have 6 technologies, and we can get these are patentable and there can be a high impact on treatment. So these are new drug discovery technologies. Towards 2035, we try to realize the launch of these, and we will promote our R&D activities.

I want to response, but there are any additional questions from you?

For example, you had ADC strategy. Is this linked to the conventional ADC technologies or siRNA? Is this something to pave the way for different areas?

[interpreted]

Please turn to Page 65. These are the new BGT candidates based on ADCs. And the cytotoxic -- novel cytotoxic payload, as you may know, we are leading the Topo 1 inhibitor isomerase inhibitor as a top innovator such ADCs in the clinical stage had drug resistance and the next drugs are needed because of the resistance.

We are anticipating that early on in research, we need a mechanism -- new mechanism of action to overcome the ADC resistance. So the novel cytotoxic payloads can be very innovative, and we can propose innovative ADCs. So Topo 1 ADC been developed and a similar impact can be expected in this technological development IO ADC field is not turned into product yet by anyone yet.

As there was a question, our proprietary IO ADC R&D is now underway and novel IO payload ADCs are being researched. ADC [indiscernible] area has been built by us. Using such insights, we try to -- we are engaging in new technology development. That's ADC approach so that we can be top 10 and top 5 oncology company to generate new innovative drugs. So that's why we are showing this. On the next page, non-ADC candidates are shown on this page, as you can see, multi-specific antibodies and other companies are also interested in [indiscernible] molecules.

This is leveraging our strength in drug discovery. We have multiple development candidates and siRNA in non-oncology fields, we are going to pave the way as well. By focusing on these 6 company like us in terms of the size, you cannot do all different types of research. So we try to focus on these in our R&D activities. Over the past 5 years, we had to stop technology development for some, but now we are beginning to focus on these 6. Did that answer your question?

So next question, [indiscernible].

[interpreted] I'm Izawa from Asahi [indiscernible]. So first -- so in the U.S., so tariff impact, I would like to understand about U.S. tariff impact. What was the size of the impact? And also for this and impacted by the drug price, MSN, so most favorite [indiscernible], so how much impact are given? And also in the Japanese market.

So in May, there is a concern raised that the innovative drug may not make inroads to the Japanese market. So what is your take on the situation? Do you have any visibility on that?

[interpreted]

Thank you for your question. So first, for the tariff impact. So almost hardly no impact is how I would like you to understand what we mean by that for the past year as well in the sixth midterm. So we did not have any particular impact that has not been incorporated into our plan. So back in April, so this is the presidential order in April.

And also amongst the couple of the pharmaceutical drug category, and they're going to waive the tariff on those and among which was ADC, so our development, our core mainstay -- so for now, the U.S. tariffs are threat or impact at this point in time, we have not -- do not need to incorporate into the plan.

Having said that, when it comes to the U.S. tariff, the presidential order that came, so for productivity to have the production back to the U.S. So with that tone, with the executive order that came published in April, so there may be incentives that was -- have been depicted in various areas in the executive order.

ADC was not in scope for that. So that is good. But we should not be complacent and we should not feel too optimistic. So we are going to continue to pay close attention to the policy. And for MSN, so for this has to do with the U.S. administration, and they have set forth a series of the policies.

And to a certain level, we have factored into our plan when we formulated the sixth midterm. And the impact given to the Japanese market, we started to hear quite often about that. So we are one of the corporations having the global traction. So the impact -- and what kind of impact that may give to Japan and other parts of the world, we are certainly going to pay close attention to the situation.

We are originated from Japan, and we have a domestic leading company in Japan. We have always been so. And the medical community, and we have been working closely to the ministry, the regulatory affairs authorities and for the betterment of the patients. So we will certainly continue to provide the treatment to the patients.

[interpreted] In the sixth 5-year business plan, you incorporated the potential impact of MFN to a certain degree. If possible, in what way are you incorporating this element in the new plan?

[interpreted] MFN question on to 5-year business plan for the specifics, allow us to refrain from disclosing the details.

[interpreted] Next question is [indiscernible] from Endpoint News.

I'm not sure who would be best to answer it, but it's basically about your target to deliver more than JPY 2.3 trillion in oncology revenue by 2030. I was wondering if you could provide a rough breakdown of how much of this figure you expect to come from breast cancer, how much from lung cancer and how much from sort of other oncology indications, just so I can get a sense of the ratios there.

Thank you for the question. This is Ken Keller. So when we look at our revenue going forward to deliver that JPY 2.3 trillion. As we mentioned earlier, today, with ENHERTU and DATROWAY, Daiichi Sankyo is one of the leading companies in breast cancer. And when we look at the over 20 key pivotal trials that will read out over the next few years, many of those add to our strength in breast cancer.

When we look at 2026, we actually expect ENHERTU to move into the early-stage breast cancer setting where cure is the goal. And we've got 2 trials that have already demonstrated standard of care changing data, DESTINY-Breast11 and DESTINY-Breast05. And I'm confident that this drug will become the standard of care.

And hopefully, over time, we can prove that we're curing more women with breast cancer. And then to add to that, with a number of our drugs like I-DXd that John mentioned earlier and with all the different lung cancer trials that we have with DATROWAY, we're going to add to our strength and become a leader in the lung cancer setting as well.

Your specific question is about what percent. Today, the majority of our oncology sales are in breast cancer. And given on the strength of our emerging data, I feel it's going to stay that way for at least the next couple of years. And then in the back half of the sixth midterm plan, we're going to see tremendous growth in lung cancer. So I hope that answered your question.

[interpreted] Others who are still raising their hands, but we are running over. With this, we would like to close the Q&A session for members of the media. If you have questions, please contact the corporate communications team at the company. Thank you very much for joining us today.

[Portions of this transcript that are marked [interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you very much for your patience. Now we would like to start FY 2025 Third Quarter Financial Results Presentation. I am from Corporate Communications. My name is Asakura. I will be facilitating today's session. In this presentation, we are going to use Japanese and English. We have simultaneous interpretation service available. [Operator Instructions] We have uploaded Japanese and English presentation material in IR library on our corporate website. Whenever necessary, please feel free to download the material.

Today's presenters are Mr. Ogawa, Senior Executive Officer, CFO; Mr. Abe, Head of R&D Division; and Mr. Ken Keller, Head of Global Oncology Business. Now Ogawa and Abe are going to take you through the financial results for the third quarter FY 2025, and then we are going to open the floor for the Q&A. Today's session will be recorded. I would like to ask for your cooperation. Now Ogawa-san, please.

This is Ogawa. Thank you for participating in Daiichi Sankyo's earnings briefing today despite your busy schedule. Now I will explain the consolidated financial results for the third quarter of fiscal year 2025 announced at 15:00 today based on the materials.

Please look at Slide 3. The content I will discuss today is as follows. Fiscal year 2025 third quarter consolidated financial results, business update, research and development update. The research and development update will be explained by Abe, Head of R&D Unit. We will take your questions at the end.

Please look at Slide 4. These are the highlights of the current earnings. Our flagship products, the anticancer agents, ENHERTU and DATROWAY continued to grow steadily and revenue increased significantly. The cost of sales ratio improved compared to the second quarter and core operating profit increased by 8.8% year-on-year. No additional major temporary expenses were incurred in the third quarter. There are no changes to the fiscal year 2025 consolidated earnings forecast from the October announcement.

Please note that as reference information, the latest sales forecast for each product are listed in the supplementary earnings materials. Although there are some movements in individual products, there is no change in total revenue from the October announcement.

Please look at Slide 5. This slide shows an overview of the fiscal year 2025 third quarter consolidated financial results. The revenue was JPY 1,533.5 billion, an increase of JPY 165.9 billion or 12.1% year-on-year. Cost of sales increased by JPY 13.8 billion year-on-year. SG&A expenses increased by JPY 93.7 billion, and R&D expenses increased by JPY 38.1 billion.

As a result, core operating profit was JPY 249.2 billion, an increase of JPY 20.2 billion or 8.8% year-on-year. Operating profit, including temporary income and expenses, was JPY 233.8 billion, a decrease of JPY 14.5 billion or 5.9% year-on-year and profit attributable to owners of the company was JPY 217.4 billion, an increase of JPY 8.8 billion or 4.2% year-on-year.

Regarding actual exchange rates, the dollar was JPY 148.75, yen appreciation of JPY 3.81 compared to the same period last year and the euro was JPY 171.84, yen depreciation of JPY 7.02 compared to the same period last year.

Please look at Slide 6. From here, I will explain the factors for increases and decreases compared to the same period last year. Revenue increased by JPY 165.9 billion year-on-year, and I will explain the breakdown by business unit. First, for the Japan business unit and others. Sales of DATROWAY, Belsomra for the treatment of insomnia and Lixiana, direct oral anticoagulant and Tarlige, the pain treatment drug increased. On the other hand, sales of Inavir, influenza treatment drug decreased. And unrealized profit on inventory of Daiichi Sankyo Espha was recorded as realized profit in the previous period, resulting in a revenue increase of JPY 10.7 billion.

The actual increase or decrease in the vaccine business, which is affected by seasonal demand after provision for returns was an increase of JPY 300 million. Next, I will explain the overseas business units. Here, the foreign exchange impact is excluded. Oncology business increased by JPY 113.3 billion due to growth in sales of ENHERTU and contribution of at DATROWAY sales.

American region decreased by JPY 24.3 billion due to the impact of generic entry for the iron deficiency anemia treatment, Venofer, and the impact of price competition for Injectafer. EU Specialty business increased by JPY 13.6 billion due to growth in sales of Nilemdo/Nustendi for the treatment of hypercholesterolemia. ASCA business, responsible for Asia and Latin America increased by JPY 35 billion as ENHERTU grew mainly in China and Brazil.

Contract upfront payments and development sales milestones related to partnerships with AstraZeneca and U.S. Merck in the third quarter resulted in an increase of JPY 20.9 billion. We received development milestone income from AstraZeneca associated with approval for first-line treatment of HER2-positive breast cancer in the U.S. for DESTINY-Breast09 and received a second upfront payment from U.S. Merck for R-DXd, which were recorded as sales revenue. The foreign exchange impact on revenue decrease was JPY 3.3 billion overall.

Slide 7 shows the factors for increase and decrease in core operating profit. I will explain the JPY 20.2 billion increase by item. As explained earlier, revenue increased by JPY 165.9 billion, including a foreign exchange impact decrease of JPY 3.3 billion. Next, regarding the cost of sales and expenses. Excluding the foreign exchange impact, Cost of sales increased by JPY 12.4 billion due to increased revenue and the recording of inventory valuation losses for ENHERTU and others in the second quarter.

SG&A expenses increased by JPY 100.3 billion, mainly due to an increase in profit sharing with AstraZeneca. R&D expenses increased by JPY 42.6 billion due to increased R&D investment associated with development progress of 5DXd ADCs. The expense decrease due to foreign exchange impact was JPY 9.7 billion in total and the actual increase in core operating profit, excluding the ForEx impact was JPY 13.8 billion.

Next, on Slide 8, I will explain the profit attributable to owners of the company. As explained earlier, core operating profit increased by JPY 20.2 billion, including the impact of ForEx. Regarding the temporary revenue and expenses, again, as explained at the second quarter briefing in late October, same period last year included temporary income from the sale of shares in Daiichi Sankyo Espha. However, this year, we don't have such impact. Although there were incomes related to litigation with former shareholders of Ranbaxy, overall income decreased.

Furthermore, there was a JPY 34.7 billion negative impact due to CMO compensation fee associated with the change in the launch timing of HER3-DXd as well as write-down of inventories of DATROWAY and HER3-DXd. Financial income and expenses contributed positively to earnings by JPY 9.5 billion, mainly due to improved FX gains and losses. Income taxes and so on decreased by JPY 13.9 billion, reflecting lower pretax income and the lower effective tax rate compared to the same period last year. As a result, profit attributable to owners of the company increased by JPY 8.8 billion year-on-year to JPY 217.4 billion.

Next is business update. Please turn to Slide 10. This slide shows the sales performance of ENHERTU. Global product sales for the third quarter of FY 2025 increased by JPY 102.4 billion year-on-year to JPY 506.8 billion. New patient share remains #1 in all major countries and regions for existing indications such as breast cancer, gastric cancer and lung cancer.

Regarding the new indications, we've started promotion for first-line treatment of HER2-positive breast cancer in the U.S. last December, driving growth in new patient share. In China, we've initiated promotion for hormone-positive HER2 low or ultra-low chemo-naive breast cancer patients in December, followed by promotion for second-line treatment of HER2-positive gastric cancer in January. The NCCN guideline has seen new additions and updates for multiple cancer types. First, ENHERTU has been newly added as a Category 1 recommendation for adjuvant therapy in HER2-positive breast cancer with high recurrence risk.

For HER2-positive metastatic breast cancer, HER2 monotherapy was already recommended as first-line therapy based on data from the DESTINY-Breast03 trial, a second-line trial, which demonstrated extremely high efficacy. Additionally, based on data from the DESTINY-Breast09 trial, combination therapy with pertuzumab has been newly added with a category 2A recommendation.

For HER2-positive uterine cancer, in addition to existing recommendations for endometrial cancer, ENHERTU has been newly listed with a Category 2A recommendation for endometrial carcinosarcoma. For HER2-positive esophageal and gastric cancers, the recommendation level has been elevated from Category 2A to category 1. ENHERTU is already listed in the NCCN guidelines for numerous cancer types and is recommended for use. We'll continue to generate data to pursue further new listings and category updates.

Next, I will explain the sales status of DATROWAY. Please refer to Slide 11. Global product sales for the third quarter fiscal 2025 reached JPY 31.6 billion, representing 83.8% of the October forecast. In addition to steady market penetration for the breast cancer indication in Japan and in the U.S., the lung cancer indication rapidly gained market traction in the U.S., significantly increasing the number of new patients.

Globally, prescriptions were issued to over 3,000 cumulative patients, approximately 1.5x more than the end of the previous quarter. Sales growth significantly exceeded expectations in both the U.S. and Japan with lung cancer indication, particularly driving sales in the U.S. Given these circumstances, we've updated our full year forecast to JPY 47 billion, up by JPY 9.2 billion from the October forecast.

For both breast cancer and lung cancer, prescriptions have expanded beyond the projections. This is primarily due to much higher-than-expected unmet needs, especially in the third line and later, leading to prescriptions for more patients than expected. Additionally, awareness among health care professionals regarding AE management such as stomatitis and dry eye, an area where we have focused on since the launch has increased and experience is being accumulated.

Furthermore, DATROWAY has seen new additions and updates in the NCCN guidelines. For triple-negative breast cancer, it's been newly added as a Category 2A recommendation for first-line treatment. For EGFR mutated NSCLC, recommended EGFR mutation coverage has been expanded from the existing category to existing, widening the opportunity for DATROWAY to make further contribution.

We'll continue to pursue further market penetration in existing sales regions and expand into new countries and regions while advancing efforts to obtain new indications. We are committed to delivering ENHERTU and DATROWAY to as many patients as possible who need these medications. Slide 12 shows an update on Seagen U.S. patent dispute related to our ADC. Last December, the U.S. Court of Appeals for the Federal Circuit issued a ruling reversing the District Court's decision that ordered us to pay damages and royalties to Seagen, finding that Seagen's U.S. patent was invalid. The court issued a ruling affirming the U.S. Patent and Trademark Office decision that Seagen's U.S. patent is invalid, dismissing Seagen's appeal. We highly value this ruling by the court.

Slide 13 is information about the briefing session. On April 8, Japan time, we will hold the sixth 5-year business plan briefing. Once details are finalized, we will inform you. From here, this is the R&D update. I will hand it over to Abe, Head of R&D.

Thank you. This is Abe. I will talk about the R&D update. First, I will explain about 5DXd ADCs. Next slide, please. In December last year, ENHERTU in combination therapy with pertuzumab obtained approval for the first-line treatment of the patients with HER2-positive unresectable or metastatic breast cancer in the U.S. As you know, this indication based on the DB09 study was approved under breakthrough therapy designation, priority review and real-time oncology review program.

Regulatory filings have also been accepted in Japan, China and Europe. And through Project Orbis, multiple regulatory authorities are proceeding with reviews. Next, please. I will talk about the final analysis results of the DESTINY-Breast03 study presented at the San Antonio Breast Cancer Symposium in December last year. This is a Phase III study that compared and verified the efficacy and safety of ENHERTU and T-DM1 for second-line treatment of HER2-positive breast cancer.

As you can see in ENHERTU group, the median OS was 56.4 months and estimated 5-year survival rate was 48.1%, showing long-term significant efficacy compared to the T-DM1 group's median OS of 42.7 months and estimated 5-year survival rate of 36.9%. In addition, no new safety findings were observed through long-term follow-up. And the incidence rate of ILD adjudicated to be drug related in the ENHERTU group was 17.5% with no Grade 4 or 5 ILD observed.

This indication has already been approved and launched in many countries and regions, including Japan, the U.S. and Europe. But these results reconfirmed ENHERTU's consistent sustained efficacy and long-term safety and substantiated its contribution to improving survival.

Next, please. This slide summarizes updates toward expanding indications for ENHERTU. ENHERTU is making steady progress in expanding indications in various countries and regions centered around breast cancer. And in December last year, based on the results of DB05 for post neoadjuvant therapy for HER2-positive breast cancer with high recurrence risk, it received breakthrough therapy designation in the U.S. Also in December, based on the results of DB06, approval was obtained in China for the indication of chemotherapy naive hormone receptor positive and HER2 low or HER2 ultra low breast cancer.

And this month, based on the results of DG04, approval was obtained in China for the indication of second and later line treatments for HER2-positive gastric cancer. Previously, in China, third-line treatment for HER2-positive gastric cancer had conditional approval. But with this approval, full approval has been obtained for second and later-line treatment.

Next, please. This slide shows the progress of each ENHERTU study. Aiming to contribute to more HER2-expressing cancers, we started DESTINY-Lung06 in October last year, targeting first-line treatment of HER2 overexpressing non-squamous NSCLC. And in December last year, we started the randomized phase of DESTINY-Ovarian01 targeting first-line maintenance therapy for HER2-expressing ovarian cancer and DESTINY-Endometrial-02 evaluating adjuvant therapy for HER2-expressing endometrial cancer.

Next slide, please. From here, this is the progress of DATROWAY. Data from the TROPION-Breast02 trial targeting TNBC not eligible for PD-1, PD-L1 inhibitor treatment was presented at ESMO in October last year. Based on this data, filings for approval were submitted in Europe and China and were accepted in December last year. Procedures toward filing are also progressing in other countries and regions. For TNBC, as shown in the table on the left, in addition to the TB02, 3 Phase III studies are ongoing in early stage and recurrent metastatic stage.

Next, please. This slide introduces new Phase III trial. The TROPION-Lung17 trial compares DATROWAY monotherapy with docetaxel in patients with non-squamous NSCLC in second line or later setting. Building on insights from prior studies such as TROPION-Lung01, we target at patients with TROP-2 NMR biomarker positive. This trial aims to expand the treatment opportunity for DATROWAY monotherapy in NSCLC.

Next slide. This slide introduces the latest status of the ongoing DATROWAY trials. The first is the TROPION-Lung07 trial, which targets first-line treatment for non-squamous NSCLC with PD-L1 expression below 50%. This trial had not previously applied the TROP-2 NMR biomarker, but following a protocol amendment, PFS and OS in the TROP-2 NMR-positive population were newly added as primary endpoint.

The second is the TROPION-Lung12 study. This is an adjuvant therapy trial for Stage 1 NSCLC with ctDNA positive or high-risk pathological features evaluating combination therapy with rilvegostomig. Regarding this trial, due to complexity of study operation, we've decided to discontinue patient recruitment. No new safety concerns were identified, and there is no impact on other DATROWAY trials.

Next slide, please. From here onward, I would like to talk about the progress of next wave. For EZHARMIA, we are preparing a Phase I trial combining darolutamide with EZHARMIA for metastasic CRPC. Regarding DS-9606, a modified PBD ADC targeting Claudin 6, we've decided to discontinue its in-house development following a strategic portfolio review. Meanwhile, DS-3610, a STING agonist ADC introduced at last year's Science and Technology Day commenced its first in-human trial in November last year.

This slide shows that EZHARMIA received Prime Minister's award. EZHARMIA was approved in Japan 2022 for the treatment of relapsed/refractory adult T-cell leukemia lymphoma and in 2024 for relapsed or refractory peripheral T-cell lymphoma. Japan was the first in the world to obtain approval. This time, in combination of health care -- in recognition of health care contribution through establishing a new cancer therapy targeting EZH1/2 epigenetic regulation, we've received the Prime Minister's award at the 8th Japan Medical Research and Development Awards following Enhertu's award at the 6th ceremony.

We are extremely pleased that the drug independently developed by Daiichi Sankyo is contributing to patients' treatment and that its achievement has been recognized by the society. Finally, news flow from now onward. Regarding upcoming regulatory decisions, we anticipate review results for DESTINY-Breast11 trial from the U.S. FDA in the first half of next fiscal year. As for the upcoming key data readouts, for the DESTINY-Lung04 trial of ENHERTU for the first-line therapy of HER2-mutated NSCLC, data is expected in the first half of next fiscal year. For the TROPION-Lung07 and Lung08 trials of DATROWAY for first line of NSCLC, data is expected in the second half of next fiscal year.

Furthermore, AVANZAR trial data is now expected in the second half of calendar year 2026. Additionally, data from TROPION-Lung 15 trial, which targets EGFR mutated NSCLC after osimertinib is still expected in the next fiscal year as previously planned. Slide 29 and onwards are appendix. Please take a look at those slides later. That's all from myself.

[Operator Instructions] The first question is from Yamaguchi-san, Citigroup.

The sound is back now to the translation line. Sorry, we missed the question from Yamaguchi-san.

Well, regarding 9606, we stated that our in-house development will be discontinued. As we proceeded in our development, we had the result. And regarding mPBD itself, its utility was confirmed.

And then how should we do moving forward?

We may have an option taking partnership with other companies who may be interested in out-licensing of this asset, but in-house development will be discontinued. Therefore, regarding mPBD technology, its usefulness has been confirmed. Therefore, the subsequent researches are ongoing. Therefore, changing the targets, the clinical programs will continue. That is our policy.

So I'm sorry. But including the competition, for clothing -- regarding 9606, given the strategic value, you decided not to do it on your own. Is that right?

In giant cell tumor, we had a positive result. So there is a room of making more development in that area. But given the portfolio perspective, we decided not to continue the in-house development in this field. I see.

Another question is ENHERTU marketing. First, starting from December, promotion started. And I'm sure if it's already appearing quantitatively in the numbers, but what is your feeling in the market, DB09 marketing promotional activities, how effective the activities are producing the results?

Thank you for your question. Regarding DB09 current status, Ken Keller is going to give you a comment, please.

Yes. Thank you very much for the question. So DESTINY-Breast09, which is the first-line HER2-positive metastatic breast cancer indication, it's been launched in the U.S. The team is now educating our oncology customers in the U.S. The data, as you know, is really outstanding. It's being received very, very well. I would expect the adoption to be very, very quick. At this point, the oncology community knows ENHERTU very well. They're comfortable with it. And with this data, I think they will embrace it very quickly.

Do you have some sense of penetration rate as of today or it's too early to say?

It is too early to say what it is. We just launched it really just a little while ago. And so we'll be able to provide you with more information in about a quarter from now.

Next question is from Daiwa Securities, Hashiguchi-san.

This is Hashiguchi speaking. My first question is related to ENHERTU Japan, your sales situation. So this time, you have made a downward revision of your forecast slightly compared to the original forecast, what's going -- what is going differently? What is the background for you to take your forecast downward? Can you explain about the reason and the background for that?

Yes, I would like to make one comment first, and then I would like to ask Ken Keller to make some additional comments. In Europe, we are seeing some adjustment. When we look at the quarter-on-quarter situation in Europe, there has been a change to the ERP system. As a result, we had to do some shipment in the second quarter, and that was affecting the quarterly sales. But I would like to ask Ken Keller to comment on the situation in Europe and sales from a full year sales perspective.

Thank you very much. When we look at ENHERTU in Europe, we're in a situation where all of the countries have launched the HER2-positive second-line metastatic breast cancer indication. And the market share, the penetration has already achieved a very, very high level. And so we see continued growth in that setting. But now as we look forward, we're going to see substantial growth in Europe as the different countries obtain access for the HER2-low indication. We've got the HER2-low indication in most countries in Europe, but now we're working through the typical reimbursement approval. As these occur, you'll see an acceleration of growth in Europe.

For Japan, what's the situation in Japan?

Yes. Let me respond to that question regarding Japan. Last year, in April, we had seen some impact. NHI drug price revision just before -- just before the start timing in April, we had seen some last minute on demand and that impact still lingered. Overall, ENHERTU future growth trajectory in Japan remains unchanged.

Next, DATROWAY NSCLC Phase III trial progress, that's what I would like to understand. Avanzar study was changed from the first half to the second half in terms of the timing. And for TL07, your disclosure was always saying that FY 2026, but AstraZeneca is saying first half of the calendar year. And in your fiscal year, latter half, you've made a timing change to the latter half of your fiscal year. And what is the reason behind this timing change?

Thank you very much, Mr. Hashiguchi. First, regarding AVANZAR, enrollment has been complete. And with the event -- with the incidence of event, we understand that there has been change made, and that's all we know. And for TL07, 08, we've disclosed second half of this fiscal year. So it's still being in line with our initial plan.

Regarding 07, primary endpoint was added this time. And so when you get the overall primary endpoint data, I guess you are going to make a disclosure. Is that the case? Or if you collect -- can collect the data on already set endpoint, are you going to disclose those endpoints first or like all of them altogether?

Thank you very much for your question. Regarding 07, NMR biomarker has been added to primary endpoint, as we have explained. And next year, second half, the PFS data is expected to be disclosed. So whenever we have event, we are going to make a disclosure. And as we have experienced at AVANZAR, when event becomes long or takes longer, then the timing of the disclosure may come later. But when that happens, we are going to communicate to you. This time it's protocol amendment, with regard to that, we've had a lot of sufficient discussion. And what's more important here is that is that we are going to get the positive study results. So we do our best, and we continue this study.

Next question is Sakai-san from UBS.

This is Sakai, UBS. My first question is about the follow-up question of TL-07. There are 4 primary endpoints now. Is that right? And then what is the hierarchy of the statistical analysis? And how should we consider the alpha? And TL-08 and 10, don't you have to change their primary endpoints?

Thank you for your questions. Whether or not in total, there are 4 endpoints in ITT and NMR positive population, PFS and OS will be evaluated as primary endpoints. And as a result, how we will be leading to the filing, we will consider risks and benefits, taking a look at the study results and make a strategy for filing. Therefore, at this point in time, which is going to be included or not, I may have to expect that anything is not yet definite. Therefore, I'd like to reserve my comment this time. But based upon data, we will proceed our filing.

What about 08 and 07.

regarding TL-08, we are also having discussion. And we are currently considering to include NMR as of today. And if we decide and add to this change, then we will also let you know. Concerning TL10, we don't have any idea at the moment to make such an aggressive change.

Second question is the inventory write-down on the balance sheet. I think it was towards the end of the year, and it increased remarkably. What are the items contributed to that increase? And like the past case, don't we have to worry about any potential write-off of inventories?

Thank you for your question. At this point in time, there is no potential impairment we anticipate. So that's one point. And for ENHERTU and DATROWAY, overall, they are accelerating the growth globally. And especially the stock takings are accumulating in the U.S. for the purpose of growth, and that is affecting most.

Next question is from BofA Securities, Mamegano-san.

I am Mamegano from BofA Securities. I would like to make one clarification on IDX. Phase III trial received a clinical hold, but I heard that this clinical study was reconvened -- recommenced. Is that the case? And for this, I think it was a trial to support the filing. And can you tell me like whether you've made -- you've submitted the filing already or not?

Yes. Thank you very much for your question. And sorry that we've concerned you I-DXd, we've received a partial clinical hold, and it's been lifted already. However, I would like to explain the current situation. ED8-Lung-02 study shows ILD series serious, may have ILD serious cases and our R&D team came to realize that and we stopped the patient recruitment, and we made a report to the FDA. And then FDA has issued partial clinical hold and that's been already disclosed -- sorry, that's been already lifted.

But in a meantime, ourselves and Merck decided to have a more strict risk management for ILD. So ILD high-risk patients are now excluded from the trial, and we have more strict inclusion criteria. Independent data monitoring data is looking at the safety and efficacy data more frequently. And on top of that, participating investigators and clinical site staff are receiving additional education and updated training amendment of protocol, ILD symptoms and ILD management are now more thoroughly implemented with those partial clinical hold has been lifted.

And for ED801 study submission. What is the impact on the filing?

There is no impact on such filing. So we are having a discussion with the regulatory authorities in different countries and regions. And we stick to the original time line. That's all.

One more question. You're going to announce MTP, midterm business plan in April. And that's -- with regard to DATROWAY, I'm sure this is a growth driver for you. But now you have a AVANZA trial. And in the second half, you're going to have top line result. And in midterm business plan, DATROWAY's assumption. How should we expect DATROWAY's assumption to be laid out in the MTP?

Thank you very much for your question. Well, we would like to make a detailed presentation on MTP when we make announcement. So I can't make a detailed comment at this point of time. But DATROWAY study result such as AVANZA study result and the others will make a big difference in coming 5 years business. So when we make announcement of MTP, we will explain about the assumptions and the scenario on which MTPs being formulated. We would like to offer you as much explanation as possible.

Next question is from Ueda-San, Goldman Sachs Securities.

This is Ueda, Goldman Sachs. I have a question about clinical trials of DATROWAY. This time, TROPION-Lung07, which biomarkers were used. As a result, enrollment increased in terms of number of patients and the data affect to the data announcement timing? Or do you think that you still need to review all those? And also for 08 study, biomarker usage is now under review. And if you decide to use it, then should we anticipate that the timing of announcement will be changing.

Thank you for your question. Regarding the timing, this time, the enrolled patients numbers have been increased and already we completed enrollment. Therefore, there is no delay anticipated. It's already complete. But as we experienced with AVANZAR, if any events happen and causing any delay, we will let you know. So for the enrollment of the patients compared to the original plan, we added on NMR, and we have already completed the enrollment. Did I answer to your question?

Yes. And it's the same situation for 08?

Regarding 08, as of today, I'm sorry, I cannot comment in details, but a similar strategy is taken to move forward.

I understood. My second question is about ENHERTU indication expansion impact. First, in the first-line treatment, as you expand the indication more, I think the sales will be accelerated. And already in the U.S. DB09 positive results has been disclosed. And as a result, do you see already some positive impact in the clinical practice? Or can we expect more acceleration of the sales expansion?

And DB05 and 11, those approvals are also expected. And number of patients seems to be big. But given the number of cycles of treatment, I may consider 09 contribution may be big or if actual the target population expands and if the clinical practices are conducted more efficiently, then there will be also a major contribution expected from 11's result. Which way do you consider?

For this question, Ken Keller will answer to your question.

So if I heard the question correctly -- we're already seeing some spontaneous use in DESTINY-Breast09, from almost the moment when that data became public. So we are seeing people adopting it and using it already, even though commercially, we've launched this just a little while ago. As we project out to the early-stage breast cancer settings of DESTINY-Breast11 and 05, in these early settings, the goal is cure. And both of these studies provide standard of care changing new data. And I expect them and everything we're hearing from the community is that they will -- it will be embraced very, very quickly. Did that answer your question?

Next question is from JPMorgan Securities, Mr. Wakao, please.

This is Wakao from JPMorgan. My first question is as follows. This time, you didn't have a temporary expense. But wasn't there any special factor? And then for the CMO compensation fee, I thought that there is something which is still under negotiation. What's the status right now?

Temporary expense that we disclosed. And on top of that, is there anything else? The answer is no. And going forward, with regard to the CMO compensation fee, we did -- if we scrutinize the situation and when something comes up, we are going to disclose. But at this point of time, we don't -- we haven't identified any outstanding remaining compensation fee that we need to pay to CMO.

When are we going to see the conclusion of this?

We are having an ongoing discussion with CMO and we cannot determine when is the expected timing of the conclusion of this negotiation.

TL-07 and 08, you are now adding NMR marker -- biomarker. And can you explain about the background why you've decided to do so? I understand that you are trying to improve the probability of success. But if you are confident in the result of Dato, I don't think it was necessary, but what's the reason behind?

Thank you very much for your question. We've had a lot of internal discussion on that. And at one point of time, we thought that this biomarker is not necessary. But pembrolizumab and Dato-DXd, as we have experienced in breast cancer, these 2 are good match. And for lung cancer -- in lung cancer, patients are hetero as based on our experience. So NMR biomarker in lung cancer is very critical. That's one of the reasons.

And although you haven't asked this, but TL-17 NMR biomarker study is going to take place. So in the area of lung cancer, with the existence of biomarker, we can offer better benefit to the patients. And in 07, 08, by using biomarker, we can enhance the probability of success. That's why we've decided to add biomarker in the protocol.

So I understand that you've discussed with FDA on this. And for NMR-positive population, if you meet endpoint, I would understand that you can successfully make submission and of course, depending on the data, but I think you can get the approval from FDA.

Yes, we've consulted with FDA before we amended protocol. And it all depends on how good our clinical trial result is. MTP is to be announced in April. The other day, in the JPMorgan Healthcare Conference, CEO mentioned regarding the profit outlook into 5 years. So in 5 years from now, you have a sales milestone for ENHERTU, and you have cliff with Lixiana. So the profit somewhat may decline. However, if things go well, you can make some growth.

And I think that's the outline of the message of you. But can you explain about that once again?

Well, with regard to the next MTP to be announced in April, I am very sorry, but we cannot offer you any detailed comment because we are having an ongoing discussion to formulate MTP. Lixiana, LOE, Injectafers being impacted by generic, you understand those things quite well. Those would be the downside factor, negative factors. So with 5 ADC growth, we are hoping to catch up or compensate those decline as much as possible. And that's all I can tell you for now, but we are still committed to improve profitability and that's the baseline for the next MTP.

Next question is Muraoka-san, Morgan Stanley MUFG Securities.

I'm Muraoka from Morgan Stanley. I have a follow-up question about Wakao-san's conference-related item. I'd like to understand the wording exactly. Did you say decline or a slight decline? And I think it depends on how much inclusion you assumed. And if you included Dato conservatively, is it a decline or slight decline? Could you share that part once again with us?

In terms of wording, the word we used is slight decline. And overcoming the factors against the profit, we will be putting ourselves back on track for growth. And in that context, this wording was used. But how much -- I'm sorry, we cannot talk about it specifically. But at any rate, there would be some directions, negative direction putting us downside, but we would like to recover from that as much as possible and all those measures will be incorporated in our 5-year business plan. So if it is a slight decline, then I think naturally thinking you should be able to achieve a V-shaped recovery after that.

Another question is smuggling point, are you going to make acquisition by the time of next 5-year business plan? And how many deals at what the scale?

Well, excuse me, what you're asking about is to acquire external assets?

Yes, yes.

At this point in time, we don't have anything that we can talk about. But again, in our 5-year business plan, we look at our pipeline, especially in early-stage pipelines, if there are anything which we can expect working as a complementary, we would like to pursue toward the growth during the 5-year business plan and beyond, we'd like to explore externally any good candidates of assets. So that strategy is unchanged. And before the announcement of April, the announcement of the 5-year business plan, nothing is now moving at the moment in this regard.

And just one more point. Well, actually, your stock price went down much, but it came back quite quickly. Did you conduct a buyback, share buyback? It is a sharp decline and recovery. So I think probably in the next week, you will disclose whether you conducted the share buyback or not. But could you comment regarding share buyback, as we have been talking about it.

We will take into the stock price and others, and we make a comprehensive review and make a decision. And so far, on a monthly basis, we have the timely disclosure in the first operating day. And on that timing, we will continue disclosing the information.

Next question is from Bernstein, Sogi-san.

Regarding TL-07 and TL-08, I have question. NMR biomarker is now added in the primary endpoint. And I think this is a good news. Regarding this, I have 2 questions. Regarding 07, 08, it was a combination with KEYTRUDA and you use NMR and then this will increase the probability of success. And I think it will have a big commercial impact because you can combine with standard of care KEYTRUDA. 07, 08, for those 2 studies, I think you are done with the patient recruitment. And within 12 months, the result will be presented. So you have come to this end. Now you're making amendment. But you've got the kind of like consensus from the FDA. Does that mean that FDA understands the significance of NMR as a biomarker?

Thank you very much. In terms of the marketability, I would like to ask Ken Keller to make some comment. And I would like to respond to your second part of your question, whether -- how FDA sees the significance of NMR. Well, this relates to the discussion of contents of FDA, so I can't make any comment. But by including biomarker, our intention is to improve the probability of success of this trial. That was the main intention, and please allow me to repeat that point once again. And depending on the result, study result, we will consult with FDA and figure out how we want to do with the filing.

And the question in terms of adding in and working with the standard of care, you are absolutely correct. KEYTRUDA is clearly the market leader, and we've got a number of first-line non-small cell lung cancer studies with KEYTRUDA. And also, to remind you, we've got the AVANZAR study with Imfinzi which is AstraZeneca's I/O drug. So we feel that whatever the preference is of that specific oncologist, we're adding DATROWAY in a way that is very convenient, and it should lead to very quick confidence in our drug adding to whatever they prefer.

Next, regarding MTP, regarding health care conference hosted by JPMorgan. I know you're announcing MTP in April, so you can't talk much about it now, but slight decline, as you say, with regard to profit, It's not margin. Are you talking about absolute amount? Is that correct, not margin?

And also when the profit declines, the driver behind is, I guess, the aggressive R&D cost assumption. So in your case, 5 ADC has many trials and you have partners. So with regard to the R&D cost, I would assume that with AstraZeneca, Merck, you've already, I guess, made alignment on the cost. And I don't think you alone cannot make adjustment or changes by yourself, correct?

With regard to the future R&D spending, splitting R&D cost between us and the partner has been determined. So we stick to that. Which study is to be dealt by who. This is different in different trial. And when we've made agreement and then we just stick to the cost split structure we've predetermined with the partner.

During the MTP period, how are we going to control R&D cost? I think that's what you wanted to understand. So to that end, we have trials where we work with partners, and we have development that we take care of all by ourselves. So in coming 5 years, what are going to be -- which projects are we going to prioritize. That project prioritization and the resource allocation needs to be well managed.

Okay. I have a follow-up question. In next 3 years -- well, in next 3 years, not 5 years, am I correct to understand that you've already had a lot of discussion with your partners as to what kind of trials are going to take place for what product.

Yes, depending on the product, we are in a different stage. And for each product, we have formulated joint team. So rest assured, we have sufficient discussion going on between us and our partner through the joint team. And we stick to the priority that we decide on.

The last question is from Tony Ren from Macquarie.

So I want to go back to your Claudin 6 ADC, the decision to discontinue DS-9606. My question is about the construct of the modified PBD construct. You mentioned its clinical utility has by now been established. Can I confirm that the decision -- because I also noticed your peer company, Chugai also discontinued a Claudin 6 T cell engager in October. Can I confirm that it might be an issue with the target of Claudin 6. Can you also give us any sense about the toxicity of the modified PBD construct? So that's my first question.

Thank you for your question. Regarding mPBD. In terms of technology, yes, we confirmed that technology utility, as I mentioned earlier. And the reason we selected Claudin 6, there are several reasons. Therefore, we expected in this asset, but there are things that turned out as it's expected or unexpected. And in terms of science contents, we'll be discussing it in some medical conferences. So allow me not to touch upon those. But in terms of utility in the giant cell tumors, if we can confirm the efficacy, then technology-wise, it should be very good. And for that point, we could confirm.

And also side effect was manageable as well. Therefore, amongst the difficult challenging technology with PBD, we believe that our technology utility level is high. And talking about the Claudin 6 in, giant cell tumors, can't it be developed for this particular type of tumor. Well, I think it is possible. Therefore, any companies interested in this may consider development, including in-licensing. But what about the business viabilities or in terms of portfolio. Well, given our business portfolio overall, we decided to discontinue. That is the background reason. Did I answer to your question?

Yes. Yes, answered very well. I was mostly concerned about the toxicity. My second and the last question is about your CapEx plan. So Nikkei Asia reported that you guys were considering spending JPY 300, that is close to USD 2 billion on CapEx, right, in 4 different countries, Germany, Japan, U.S. and China. This obviously feels pretty big in relation to the JPY 800 billion in CapEx you guys already disclosed in the last 5-year plan. Can I confirm that this JPY 300 billion is in addition to above and beyond the JPY 800 billion already committed?

Thank you for your question about our CapEx. Well, it is not a new additional investment. So what we announced is as we have been explaining so far within the range that we have been already talking about, this spending will be incurred. Therefore, there is nothing new, nothing additional to the CapEx that we have already announced.

Okay. So it is part of the JPY 800 billion already announced?

Yes. Sorry. I'm not familiar with the articles detailed content. But yes, your understanding is correct.

Thank you very much. So with that, we would like to conclude today's earnings call. Thank you for your participation today.

Good afternoon. Welcome to JPMorgan Healthcare Conference. This is Seiji Wakao, Japanese Pharmaceutical Health Care Analyst. It's my pleasure to introduce Okuzawa-san, CEO of Daiichi Sankyo. Welcome to him conference. Please go ahead.

Thank you, Wakao-san. Hello, colleagues. I appreciate your interest in Daiichi Sankyo. I would like to express my sincere gratitude to JPMorgan for providing the opportunity to present at this remarkable conference today. My name Hiroyuki Okuzawa and I have taken on the role of CEO at Daiichi Sankyo since April 2025. It is a privilege to stand before you today and share our vision and progress as we strive to contribute to enrichment of quality of life around the world.

First, I will start with a brief overview of Daiichi Sankyo. Next, I will introduce you to our ADCs, focusing on our DXd-ADC technology that is currently the main driver of our company's growth led by ENHERTU and DATROWAY. Following that, I will talk about our Science and Technology, focusing on our exciting new multi-modality strategy. Finally, I will conclude with our shareholder return policy and our strong commitment to enhancing shareholder value.

With that road map in mind, let's begin with the first part, the overview of Daiichi Sankyo. Daiichi Sankyo is a global pharmaceutical company headquartered in Tokyo, Japan. For the current fiscal year ending March 31, 2026, we expect revenue of approximately JPY 2.1 trillion, an increase of 11% from the previous fiscal year. Our forecast for core operating profit, which excludes temporary income and expenses is JPY 350 billion, reflecting a growth of 12% from the previous fiscal year. We generate approximately 70% of our revenue outside of Japan, particularly in the United States. Our growth is primarily driven by the strong performance of our key products, the HER2-directed ADC ENHERTU and TROP2-directed ADC DATROWAY, which I will discuss in detail later. As you may be aware, the DXd-ADC technology created Daiichi Sankyo's proprietary technology platform, which is currently being evaluated in clinical development programs across 7 different ADC assets. This robust technology platform has generated 2 launched products, which are ENHERTU and DATROWAY approved in multiple indications.

In addition, I-DXd has demonstrated promising clinical outcomes in small cell lung cancer and R-DXd has shown favorable efficacy and safety profile in ovarian cancer. Most recently, DS-3790 is about advance to the clinical stage for hematological malignancies. We believe these products will also provide meaningful therapeutic benefit to the patients in need.

As for external evaluation of the DXd-ADC technology, 5 DXd-ADCs have received breakthrough therapy designation from FDA. Most recently, in December last year, ENHERTU DESTINY-BREAST05 study was granted BTD making the 14th BTD for our DXd-ADCs. The DXd-ADC platform has been widely acknowledged. In November last year, we won the best ADC platform technology award at the 12th Annual World ADC Awards, recognizing our DXd-ADC technology as the Best ADC platform capable of creating new standard of care for cancer patients. We will further leverage our Science and Technology to maximize our contributions to the patients with our DXd-ADC platform.

Our oncology foundation is built on the strength of ENHERTU. ENHERTU has become the standard of care and achieve market share leadership in the HER2-positive second-line metastatic breast cancer indication, the HER2 low metastatic breast cancer indication. The HER2 mutant non-small cell lung cancer, and HER2 to second-line gastric cancer indication. Impressively, in every country and region where it has launched it has become the market share leader and the new standard of care in less than 12 months.

Global net sales in the second quarter of the fiscal year 2025 totaled JPY 160 billion, growing 24% versus a year ago. All regions are contributing to this growth, led by the United States with more than half the total revenue. ENHERTU has made a historic mark in the community of oncology and is now poised to have an even bigger impact in 2026. This performance is a result of ENHERTU's exceptional clinical profile and the strength of our medical and commercial organizations and our alliances. To date, almost 200,000 patients from across 85 countries and regions have now benefited from ENHERTU.

Now I will describe the opportunity of the new growth of ENHERTU's HER2 first-line metastatic breast cancer indication that was obtained last month. There are 24,000 patients across the G7 countries. Today, 30% of these patients never receive a second-line treatment mainly because their disease advances too quickly to a point that the physicians and patients decide to stop treatment. This insight underscores the urgent need to treat with very best drug immediately and the remarkable benefits of ENHERTU in the treatment of first-line HER2-positive metastatic breast cancer cannot be overstated.

In DESTINY-BREAST09 ENHERTU, in combination with pertuzumab reduced the risk of disease progression or death by 44% compared to the standard of care, taxane, trastuzumab and pertuzumab. ENHERTU provided over 40 months of progression-free survival, adding more than a full year free of progression compared to today's well-regarded standard of care. ENHERTU is viewed as the most effective drug in this setting by the overwhelming majority of oncologists. This belief coupled with urgency to treat with the best drug from the start and the feedback from the oncology community that we received leaves us very confident that ENHERTU will be quickly embraced by the oncology community and become the new standard of care of these patients.

I will now transition to an update on DATROWAY, our second DXd-ADC. In the U.S. DATROWAY is approved for HR-positive HER2-negative metastatic breast cancer patients and EGFR-mutated non-small cell lung cancer patients. In Japan, it is the first TROP2-ADC approved for HR-positive, HER2-negative metastatic breast cancer patients.

Global DATROWAY net sales have now exceeded JPY 10 billion in the second quarter. In the U.S. Second quarter revenue was JPY 7 billion, growing 113% versus the previous quarter. In Japan, second quarter revenue was JPY 3 billion, growing 59% compared to the previous quarter. Early experiences, as reported by oncologists have been extremely positive in both regions. Oncologists are becoming more and more comfortable and confident every time they prescribe this medicine. These early experiences will benefit DATROWAY greatly when it receives its expected triple-negative breast cancer indication. The clinical data in triple-negative breast cancer is viewed as best-in-class by most oncologists, and we believe it has the potential to become the new standard of care.

Let's talk a little bit about the expected triple-negative breast cancer indication. For nearly 15 years, there has been no new treatment advances in the first-line metastatic triple-negative breast cancer for patients who are PD-L1 negative. Metastatic triple-negative cancer -- breast cancer, it's the most aggressive breast cancer, breast cancer subtype with fewest treatment options. 5-year survival is only 15%. There are 16,000 patients in G7, 1 out of 2 patients never receive a second-line treatment. So there is a significant urgent unmet need.

DATROWAY's TROPION-Breast02 trial demonstrated a statistically significant and clinically meaningful improvement in progression-free survival. It uniquely delivered a statistically significant improvement in overall survival. It doubled the overall response rate. We shouldn't forget that DATROWAY provides a very convenient, once every 3-week dosing, which is a significant advantage compared to the other TROP2-ADC in the market.

This is a full picture of where Daiichi Sankyo is going. In the past 5 years, we have made a successful transition into oncology. We start our next 5 years from a position of strength. Daiichi Sankyo has now reached a data-rich growth catalyst-rich moment with our new highly meaningful new indications expected for ENHERTU and DATROWAY in 2026. Behind these, there are numerous other new pivotal trials reading out over the next few years, as shown in this slide. This clinical development program creates a continuous stream of new launches across at least 4 ADCs every year through 2030. These pivotal registration trials offer the opportunity to help nearly 6x as many patients live longer, better quality of life and even bring more cures to patients across the global oncology community.

Our ADC technology continued to advance across antibodies, linkers and payloads. We are enhancing tumor specificity through improved target selection. Fc engineering and novel antibody designs. Developing conjugation methods for precise DAR control and researching payloads with mechanisms distinct from DXd. With more than 15 years of ADC research, we have accumulated deep expertise and insights into antibodies, targets, linkers, and payloads. This foundation is our core strengths. Building on this, we remain committed to creating a new ADC and will continue to lead the field of antibody drug conjugates.

As next ADC technology platform candidates, we are developing modified PBD ADC technology as well as STING agonist ADC technology, incorporating cancer immunotherapy concept. The first assets based on these platforms, DS-9606 and DS-3610 have already entered clinical trials. We are also actively conducting research for other innovative ADC concept beyond these ADC technologies.

Next, I will present our Science and Technology. I will now provide an overview of our immunotherapy research for cancers. Why are we investing in immuno-oncology or IO? The rationale lies in the fact that cancer immunotherapies exemplified by immune checkpoint inhibitors have demonstrated sustained effects in preventing cancer recurrence which is so to be attributable to the acquisition of immune memory. Furthermore, IO approaches have the potential to offer a new treatment opportunities for tumor types that exhibit low sensitivity to existing therapies. In addition, we aim to achieve curative outcomes through complementary pharmacological effects by combining cancer immunotherapy with DXd-ADC.

Over the past decade, we have conducted extensive research to identify signaling pathways and various molecules that activates cancer immunity as drug discovery targets, resulting in the creation of multiple development candidates and the establishment of our proprietary IO franchise. While today's presentation only shows you a portion of our work, as illustrated on this slide, we are pursuing cancer immune activation through multiple mechanisms. Since DXd-ADC's include apoptosis in cancer cells, and thereby serve as a trigger for immune activation, we anticipate complementary effects when combining IO franchise agents with DXd-ADC's in addition to their antitumor efficacy as monotherapy.

As part of our multi-modality strategy, we are advancing innovative drug discovery using diverse approaches, including antibody-based therapies such as ADCs as well as medium-sized molecules, nucleic acids, gene therapy, glycoengineering and messenger RNA vaccines.

On the left, within our ADC platform, we have created multiple novel ADC technologies, including the DXd-ADC platform. Through the development of innovative medicines, leveraging varieties of modalities, we are committed to transforming standard treatments for a broad range of diseases, including cancer, and we'll continue to pursue this goal through daily research efforts.

Please go to Slide 20. This slide shows our In-House Global ADC Manufacturing Sites. Currently, Daiichi Sankyo has 13 manufacturing sites globally. In Japan, we have 4 sites. Globally, we are building ADC manufacturing capabilities -- capacities at 3 sites in Germany, China and the United States.

Here, I will talk about shareholder returns. By improving capital efficiency and by enhancing shareholder returns. We aim to achieve fiscal year 2025 target for dividend on equity of 8% or more, which exceeds shareholders' equity cost. We will enhance shareholder returns by dividend increase, taking profit growth into account and through flexible share buybacks. We plan to increase the annual dividend for 4 consecutive years, taking our profit growth into account. By realizing dividend increase, we expect to achieve DOE of 8.5% or more in fiscal year 2025, which exceeds our original target.

We are more confident today than ever before that our work over the next few years will cement Daiichi Sankyo's position as a true global oncology leader. We are currently at the last year of our current 5-year business plan and with the start of our new fiscal year in April this year, we plan to announce our new 6, 5-year business plan. Leveraging our greatest strength, science and Technology, we will continue to prioritize maximizing the barrier of the DXd-ADC's. Through challenging new innovations, we will strive to contribute to the patients and achieve sustainable growth.

That concludes my presentation for today. I hope this overview has given you a variable insight into Daiichi Sankyo's current position, our innovative ADC technology, our evolving multi-modality strategy and our strong commitment to delivering enhanced shareholder returns.

At this point, I would like to invite my colleague, Ken Takeshita, Global Head of R&D, to join me in -- for Q&A session. Ken brings extensive expertise, and we'll be happy to address any questions or comments you may have.

Thank you all very much for your time and attention. We look forward to your questions.

Thank you, Okuzawa-san. I start Q&A session. And I have 2 questions for Okuzawa-san regarding midterm business plan. I believe that the growth achieved during the HIF's midterm business plan, which concluded in fiscal year 2025 has been symbolized by the success of DXd-based ADC agency franchise. With only a few months remaining in the current midterm business plan, how do you reflect on this phase?

So thank you Wakao-san. So current 5-year business plan is a time for us. A rapid and significant growth and transition from a cardiovascular company to oncology company. In the first 5 years, our revenue doubled from JPY 1 trillion to JPY 2 trillion and our profit have tripled. And this growth was realized mainly the significant growth of ENHERTU, our first DXd-ADC.

So we are developing these DXd-ADC platforms and not only for ENHERTU, but for other DXd-ADC, in total, 5 DXd-ADC's. We successfully launched the second DXd-ADC DATROWAY that is also growing nicely and both products we are collaborating with AstraZeneca. And we have the other 3 DXd-ADC partnered with U.S. Merck and co-development is going smoothly. And not only this 5 DXd-ADCs, we have still the 6th and 7th DXd-ADCs, both unpartnered and as I presented new modalities are now coming into the clinical stage.

So those are the remarkable success in clinical development and commercialization. And thanks to the success, we are now foreseeing, achieving the main financial KPIs for the current 5-year business plan, and including the ROE and the DOE target. And also, we increased the dividend in the 4 consecutive years in the past and we will continue the enhancement of shareholder returns for future.

For this question, has you planned to announce the 6th midterm business plan in April? What will be the key pillars of the new midterm business plan?

Yes. So first pillar will be the continued growth of 5 DXd-ADC's. These are the near-term growth opportunity. So for realizing that we continue the investment in clinical trials and also commercial and medical affairs activities.

And second, we are going to establish our own capacity and capability to pursue the key clinical trials by ourselves. We have good candidates like 6th DXd-ADC or 7th DXd-ADC's and so on. So therefore, this will be the second pillar to become the standalone global clinical development player in oncology.

And third, we are aiming at the identification of new breakthrough generating technology after DXd-ADC's. Our Tokyo Discovery Research team is working on various candidates of next BGT. And with that, we aim at the sustainable growth even beyond 2030. And last but not least, we would like to continue the enhancement of shareholders' return including dividend growth with flexible share buybacks.

Any questions from the floor? Please raise your hand if you have question. Please?

I have 1 comment and 1 question. First of all, your TROP2 targeted DATROWAY is superior to the other TROP2 targeting 100% due to your linker payload, which is the gold standard. My question is about the STING agonist after the MERSANA trial that had kind of disastrous outcomes. And I don't know if you can disclose, but what are you doing differently that you haven't entered these problems.

Okay. Thank you very much for that question. So it's a bit difficult for me to give you all the details of why we think it's different. But there is -- I think it's very important to note that the linker, as you mentioned, for the TROP2 program. It's also key to understanding how to administer these STING agonist in DCs. Yes, okay.

Any other question? Following this question, I have one question on your TROP2 DATROWAY. Increasingly consensus that ENHERTU will continue to scale further. Could you share your expectations for DATROWAY, the DXd which has been showing a solid sales momentum...

Yes. So as you just heard, the DATROWAY, the TROP2-ADC is already approved in certain indications in EGFR-mutated lung cancer and certain types of breast cancer and at least in breast cancer. We have many more Phase III clinical trial readouts in triple-negative breast cancer, particularly the PD-L1 positive patient population. And so the early data that we can see from the AstraZeneca conducted BEGONIA study, really suggests that this combination of a checkpoint inhibitor plus TROP2, you see the DATROWAY it's really a great combination for these patients with triple negative. So we can all expect that really great results from these ongoing Phase III studies.

In addition, we do have a very important earlier line programs EGFR-mutated lung cancer as well as in the non-EGFR-mutated the frontline clinical trials -- we have -- in totality in lung cancer between these EGFR-mutated patients in a non-EGFR-mutated patients. We have about half a dozen different front-line lung cancer study. So we are very much heavily invested in DATROWAY for lung cancer. When I say we're talking about the partnered programs. So AstraZeneca and Daiichi Sankyo both, we are very much very interested in this drug in lung cancer.

I have additional question on DATROWAY's [indiscernible]. Market is interesting data read out on AVANZAR. And how do you assess the probability of success, AVANZAR, TL-07, TL-08 which target fast-growing lung cancer with [indiscernible] DXd and I expect to read out in 2026.

So in DATROWAY lung cancer program, the non-EGFR-mutated patient, this is what we're talking about. We have right now 3 different studies, which combine DATROWAY with either a PD-L1 drug or a PD-1 drug in pembrolizumab or durvalumab. And in those studies, we are incorporating this very important predictive biomarker that which we call the QCS biomarker that was developed by AstraZeneca. This is a digital pathology biomarker. And in the relapse setting, this biomarker works very well. And so because we have this access to this incredible digital biomarker, we think that the probability of success is quite good in the front-line lung cancer patient population.

Any question? Okay. Going back to medium-term business plan. Okuzawa-san I have one question. So could you share your outlook on R&D investment under the 6 midterm business plan? And how you intend to balance R&D investment with operating profit?

So we foresee the continued growth for the R&D investment because we have rich pipeline not only for the partner programs, but for our own unpartnered programs. So if we look at the balance between R&D spend and profit because of the LOEs of some key products like LIXIANA, in the first half of the coming 5 years, we would face the slight decline of the profit. So more R&D, continuously investment but in the second half of the coming 5 years, we will come back to the recovery phase of also the profit. So by the end of the next 5-year plan by 2030, we will see the good balance between R&D and also operating profit and the margin ratio will be improved as compared to today's margin. That is our rough sketch of next 5-year plan.

Any question? So Takeshita-san, could you share your expectations for ADCs beyond ENHERTU and DATROWAY. And are there any pipeline assets that you believe could have ENHERTU-like potential beyond ENHERTU?

Okay. So let me just make a comment about what we have in our pipeline beyond ENHERTU and DATROWAY. So it's very important to just really talk about our research development strategy. And we're what we call a platform strategy. So platform refers to the base construct of an ADC with an antibody linker and the payload. And all of you now are witnessing our very first platform technology that we developed. This is a DXd-ADC technology. And we can see that with the DXd platform, we have been able to generate many, many drugs that are either approved or likely to be approved.

Right now, I think it's reasonable to say that of the many DXd-ADC's we have from the platform, we have enough data from the 5 of them to say reasonably that 5 out of 5, the success rate is 5 out of 5 with Phase III. And so that's the platform strategy that we're doing.

Now the next platform, as you heard is another -- different payload. And then we have another payload with a different platform, and we have more coming. And so this is what you can expect from us in terms of our productivity from our resource programs. And we've been doing this with ADC research for 15-plus years. We got incredible amount of knowledge in linkers, and payload as well as, of course, the binders. And so this is what we're doing, generating many different platforms for the future.

Just a quick question. So regarding the -- obviously, the research and also the multiple pipelines and successful pipelines that you have, with the JPY 1.9 billion investment globally that you've made in terms of the manufacturing facilities globally, do you anticipate that being the future strategy for Daiichi Sankyo, where you build in-house manufacturing capabilities? Or do you plan to also outsource some of your manufacturing capacity to partners such as CDMOs or CMOs, et cetera?

So in the current 5-year business plan, we decided to make investment in both our in-house manufacturing capabilities and external CMO network. And with that, we successfully manufactured and supplied ADC products. And in the coming next 5-year business plan, -- our direction would continue means to make use of both internal and external because we have 5 DXd-ADCs. But beyond that, our direction is to make use of more internal in-house manufacturing capabilities and less dependency to CMO. That's a long-term direction.

So sorry. So there's no time. So we tried to wrap up this Q&A session. Thank you for your time. I appreciate your presentation and Q&A. I hope we see you soon. Thank you so much.

[Interpreted] Thank you for your participation. We will now begin Daiichi Sankyo's Science and Technology Day 2025. I am Asakura from Corporate Communications, your moderator today.

First, regarding languages. This briefing will be conducted in Japanese and English. Simultaneous interpretation is available. Please click the Interpretation icon at the bottom of your Zoom screen and select either Japanese, English or original audio . If you select original audio, you will hear the original audio. The Zoom screen and Live stream will display the English presentation materials. The Japanese and English presentation materials are available on our corporate website's IR library under the IR presentation materials page. Please download and view them as needed.

Today's speakers are Okuzawa, President and CEO; Takeshita, Head of Global R&D; Ken Keller, Director and Head of Global Oncology business; Kashiwase, Head of Global Technology; and Abe, Head of Global Research. Following the presentations, we will hold a Q&A session with all speakers. Please note that today's briefing session will be recorded.

Okuzawa-san, the floor is yours.

[Interpreted] This is Okuzawa speaking. Thank you very much for joining Daiichi Sankyo Science and Technology Day 2025 today. We sincerely appreciate your attendance.

Leveraging greater strength, science and technology, we have delivered numerous innovative medicines to patients. Within this effort, our oncology pipeline and product portfolio has grown significantly over the past 6 years through strategic alliances with AstraZeneca and Merck & Company. And ENHERTU has been approved for 6 indications making a significant contribution to affected cancer patients. And this year, we announced 3 positive Phase III data sets for early-stage breast cancer and early line treatment of metastatic breast cancer. And for ENHERTU positive breast cancer, first-line treatment, we obtained approval yesterday, U.S. time, for early stage breast cancer. We are preparing to bring each of these to patients. Furthermore, we have initiated 4 new Phase III studies to further expand the product's value.

Regarding DATROWAY, we have experienced various things. But following its launch early this year, it has already obtained a second indication and subsequently obtained positive data in TNBC preparations and now underway to deliver it to patients. Moreover, we are advancing more than 10 Phase III trials anticipating substantial future expansion of the product value.

Regarding I-DXd and R-DXd, favorable efficacy and safety profiles, respectively, were confirmed in the Phase II trial. We are currently engaged in discussions with the authorities to establish new treatment for cancers with high methane. We are also exploring various possibilities for expanding the range of applicable cancer types. Through I-DXd and R-DXd, we aim to contribute to cancer patients in waste distinct from ENHERTU and DATROWAY.

With respect to HER3-DXd, we are advancing clinical trials targeting solid tumors other than lung cancer, such as breast cancer and simultaneously, we are actively pursuing biomarker discovery. Further clinical trials for DS-3939, which we are currently developing independently are progressing smoothly. Also, we are preparing to commence clinical trials for DS-3790, our first DXd ADC targeting hematological malignancies. Preparations are underway to commence clinical trials. Thus, the DXd ADC platform is not only driving ENHERTU forward, but also numerous innovative cancer products powerfully driving the enhancement of our corporate value.

The DXd ADC platform has also obtained high plays from outside the company. In November this year, we won the Best ADC Platform Technology Award, with the recognition of our DXd ADC technology as the best ADC platform capable of providing new standard treatments for cancer patients. Moving forward, we will further leverage science and technology to create innovations following our DXd ADC platform and aim to become a top 10 global company in the oncology field or even more than that by 2030.

Today, we first begin with Dr. Takeshita, the Head of Global R&D on R&D achievements to date, and future strategy. Following this, Ken Keller, Head of Global Oncology Business will discuss the growth and outlook for Oncology Business. Then Mr. Kashiwase, Head of Global Technology will explain a global manufacturing framework and supply chain strategy. And finally, Abe, Head of Global Research, will introduce our research domains.

In the next fiscal year, we plan to announce our sixth midterm plan. We will continue to prioritize maximizing the value of DXd ADCs and through challenging new innovations, we will strive to contribute to patients and achieve sustainable growth.

So first of all, Dr. Takeshita please.

Thank you very much for that introduction, and it's my pleasure to go over with you our clinical development programs for Daiichi Sankyo. Next slide.

I do want to emphasize here that we have 4 major themes from my portion of the presentation. One is that we have many DXd ADCs. We are just -- we are more than just the ENHERTU company. We are really becoming a DXd ADC company right now for the next few years. But in addition to the DXd ADCs, we have new concept ADCs with different characteristics in DXd ADC that we have globally. And not only that, we have a lot of interesting compounds in our pipeline that are not even ADCs. So we'll go over that with you also.

And finally, I do want to make some points that because of the strength of our internal oncology pipeline that we can create scientifically rational combinations to include not just external combinations with external compounds but also two internal compounds. This really is a very big advantage for us in the future.

Next slide. Just to give you some additional dragging information. You can see a short list of major accomplishments for this calendar year. And it includes many, many ENHERTU regulatory approvals, breakthrough designations and as well as also regulatory approvals for DATROWAY in lung cancer and now, of course, in breast cancer. And we are, of course, also moving ahead in other DXd ADC programs, including breakthrough designations for I-DXd and R-DXd as well. So we are really forging ahead with all of our DXd ADC programs.

Next slide. And additionally, we have published many, many papers in our DXd ADC technology and also have been featured in many articles in top journals like The New England Journal and Nature Medicine. And as you just heard, we have received many awards for our technology.

Next slide. Okay. So let's just go over now by indication. And this, I think many of you are familiar with this, what we call a disease map. The columns represent different lines of therapy from neoadjuvant on the left column, all the way through second line and later relapsed/refractory cancers. The rows represent various subtypes or subgroups of breast cancer. And then you can see that each box is represented by the clinical trial that we are conducting.

And just to remind you that these are color coded. The orange ones represent ENHERTU clinical trials, blue represent the DATROWAY clinical trials and green represents the HER3 programs. And furthermore, the color scheme is such that the dark colored boxes are already approved. So you can see that with ENHERTU, there are a lot of dark orange boxes. For this year, I would like to note that we have 4 additional new data that are positive Phase III trials, 3 are in the ENHERTU category; DESTINY Breast11, DESTINY Breast05 and DESTINY Breast09 and one from the DATROWAY program, the TROPION-Breast02.

And as you heard, DESTINY-Breast09 was just approved by the FDA earlier today, U.S. time. And so this one should change color from light orange to darker orange. So of course, it's an amazing set of accomplishments in just 1 year for this entire program.

I also want to make a mention of the blue ones in Star. These are the TB series of DATROWAY trials, TB03, 04 and 05. These are going to be the next set of trials in early-stage breast cancer and TNBC, and I'm going to go over with you some early data that really points to a very strong data that predicts for I think what is likely to be a successful clinical trial outcome in the future.

Next slide. So just to very briefly go over some of the very interesting and positive clinical trial data from DESTINY-Breast11 in the neoadjuvant setting and DESTINY-Breast05 in post neoadjuvant setting. Both of these have very positive end points that are not just statistically important, but also clinically meaningful data.

Next slide. This is our DATROWAY TROPION-Breast02 study. Again, this is a very important data showing not just positive PFS data but also overall survival data. And just a side note to say that this is a very interesting clinical trial because there are additional comparisons and maybe some of the cross comparisons that we can make with similar ADCs. And we can see that the fact that we achieved the overall survival data here is a very important and meaningful compared to some of the other TROP2 targeting ADCs who have studied a similar patient population that did not achieve overall survival benefit.

Next slide. Now going on to the additional ongoing studies TB03, 04 and 05. We have early data from a clinical trial called BEGONIA, in which DATROWAY is combined with durvalumab, and we have some preliminary data here from the BEGONIA study really showing us some early data, but very strong in terms of not just response rates, but durability of response. So these are very important. The preliminary data give us really good reasons to believe there are eventual Phase III studies, TB03, 04, 05 will eventually report out as positive data.

Next slide. Now moving on to lung cancer. Again, this is our disease map. And you can see that we have the EGFR-mutated second-line later box filled in with TROPION-Lung05. We have additional many trials with DATROWAY. And moving on to the ENHERTU program. As you know, we have our approval already in the HER2-mutated lung cancer in relapsed/refractory setting, and that we are conducting earlier lines of therapy in ENHERTU as well.

Additionally, we have one more drug in lung cancer, and that is the I-DXd program. With the IDeate-Lung01 clinical trial data, we were able to obtain some breakthrough therapy designation from FDA, and we are very hopeful that eventually this will lead to approval.

Next slide. And moreover, it's important to note here that in small cell lung cancer, we have two drugs, not just one but two drugs that are very active in small cell lung cancer, I-DXd that you just saw earlier in the previous slide, but also a drug called gocatamig. This is a DLL3-targeting T cell engager, very different mechanism of action, but at the same time, very active in small cell lung cancer. And you can really see that this is a natural place to combine these two drugs to really achieve much greater efficacy than just one drug alone. And possibly, once we generate a combination of data, it may be a path forward into earlier lines of therapy, including newly diagnosed small cell lung cancer.

Next slide. Now in terms of the DATROWAY program, I do want to make a mention of this very sophisticated digital pathology, predictive biomarker program that was originally pioneered by the AstraZeneca team. This is what we call TROP2 NMR. NMR stands for normalized membrane ratio. This is something we used to call quantitative continuous scoring, but we kind of renamed it NMR. So this is what we are calling it now. And this is a fancy way to use digital images, not just regular digital examination of the staining pattern, but the computerized digital image analysis of immunohistochemistry to allow for prediction of whether or not a patient is likely to benefit from DATROWAY.

And next slide, you'll see next slide that indeed, this is something that we can certainly do by looking at the TROP2 NMR positivity versus negativity. In this slide, this is from the TROPION-Lung01 study, and you'll see that in a docetaxel arm, this is the gray line, the gray solid line and gray dotted data line. The overall benefit from docetaxel is the same, regardless of whether you are NMR positive or negative.

On the other hand, if you look at the red colored lines, the dotted and the solid lines, you'll see that the dotted line is about the same in terms of performance as docetaxel. These are the NMR-negative patients, whereas NMR-positive patients have a substantially better outcome because of the ability in which the NMR was able to identify patients who are likely to benefit from DATROWAY.

Next slide. And we see a very similar trend, not just in a relapsed/refractory setting, but in the earlier lines of therapy, the frontline setting, even when DATROWAY is combined with chemotherapy. So this is a very important finding because we can now incorporate this NMR into many of our frontline studies.

Next slide. So as many of you know, we have a lot of these frontline lung cancer studies going on, not just a TROPION-07 or 08, but we have the AVANZAR study. And so -- and we also have TL-10,TL-12. All of these have the opportunity to have NMR incorporated into the analysis. So we are very excited with this prospect of having a predictive biomarker for DATROWAY.

Next slide. Okay. In addition, this is the gynecologic cancer disease map. You see again here that we have some colors already. The orange, the dark orange boxes based on the ENHERTU approvals, but we also have additional clinical trials going on with the ENHERTU program as well as the R-DXd ovarian cancer from REJOICE-Ovarian01.

Next slide. This is some of data from REJOICE-Ovarian01 study, and you'll see that so far, we are seeing really great efficacy. And based on this data, the FDA granted us breakthrough therapy designation. So we are very hopeful that eventually, once we submit the data, this will lead to an approval.

Next slide. In GU cancers, prostate cancer and bladder cancer, we also have very extensive programs and that at least in bladder cancer, we do already have an approval with ENHERTU. So we have -- just to show that we have a lot of wide range of disease cancers besides just the breast cancer that you're familiar with, with ENHERTU programs.

Next slide. Okay. New concept ADCs. Next slide. It's very important to note that ADCs are modular in nature. And it's also very important to note that our research team that you'll hear about a little bit later from Yuki Abe, has a huge amount of extensive experience in each of these modules; payload module, linker module, an antibody module. And just by combining different ways in which you can have a payload versus linker versus an antibody, you can create new ADCs.

Now I think we are often asked what is our advantage at Daiichi Sankyo compared to other companies that have acquired ADCs from other companies, biotech companies technically. And this slide illustrates our major advantage in the field of ADCs. We have extensive understanding of each of the modules and how they -- when they combine in various different ways, they create new properties and new compounds. So this is our major advantage. We have an extensive history of understanding each of these modules that make up the ADC.

Next slide. I do want to mention that in addition to our ADC programs, we have started new programs in non-ADC and in oncology. This is some of the ones that are listed here. And of course, as we go further ahead, we'll be able to report interesting clinical data. But just to give you some understanding of the sophistication of these programs.

Next slide, I'm going to go over some of these with you, 2243. This is a T cell engager targeting HLA-restricted NY-ESO antibody. So NY-ESO, I think many of you are familiar as being a T cell receptor target for tumors. And because this is a HLA-restricted drug, you can imagine that this is a T cell receptor like drug. But it's important to note that this is not a T cell receptor, this is an antibody. So this is a very sophisticated, very innovative way to create T cell receptor like properties for a monoclonal antibody. So we have this starting out in a clinical trial and we're very excited about the scientific aspects of this program.

On the right-hand side is 5361. This is another agent, which is designed to enhance tumor immunity. This is an NMD inhibitor. This is a drug then that promotes further translation of premature termination codons that may result from frame shift mutations. So typically, when there is a premature termination codon in frameshift mutations that messenger RNA is degraded so that, that protein coded by the frameshift mutation, messenger RNA is not translated into protein.

Using this NMD inhibitor, one can force the tumor cell to translate the messenger RNA, the abnormal RNA into the protein resulting in amino acid sequence within the protein that is foreign and therefore, recognizable by the patient immune system as being a foreign antigen. So this is a way to enhance immunogenicity of cancer cells.

Next slide. And then we also have yet another modality in our pipeline now, a targeted protein degrader. This is something that many companies have, and I just want to let you know that we have this too. And our first one we call the 9051. The first-in-human patient study has started in November in solid tumors, including prostate cancer.

Next slide. Okay. Next slide, the scientifically rational combinations. Okay. Next slide, please. Now what is important to note here is that based on the assets we have in our pipeline, we can create very interesting scientifically rational combinations that are based on the DXd ADC backbone. So for example, on the left-hand side, we can combine DXd ADCs with an IO agent, not just PD-1 drugs, but other ones that I just mentioned to you. And you can see the durable effect that we can see in our clinical trials.

We can also promote engagement ADC and our potential synthetic lethality by combining DXd ADCs with certain drugs that target increased antigen or increased payload or increased affinity of the payload in the cells at the level of the DNA.

Next slide. Okay. So we are already doing such combinations with IO agents. And you can see here, not just the PD-1 drugs, but also the very different kinds of innovative IO drugs that are available to us within our internal pipeline.

Next slide. Okay. And so and this is all represented now in many, many of our combination clinical trials with pembrolizumab, rilvegostomig and the other internal assets that are listed here.

Next slide. So just to summarize here from left to right, our research program is continuing to focus on both oncology and non-oncology indications as well as to create new ADCs based on technologies that we have in our research program. But in a clinical pipeline, we have prioritized the strength of our clinical oncology pipeline and also that emerging clinical stage non-ADC pipeline can be leveraged to create new novel combinations with existing ADCs.

So that's my section, and I'm going to hand it over to Ken Keller now.

Thank you very much, Ken. Next slide, please. Today, I will cover 3 topics. Number one is what we have accomplished in oncology these past 5 years. Number two, is how we are approaching a time of unprecedented number of growth catalysts, not only for Daiichi Sankyo, but the number of near-term growth catalysts we have is among the highest in all of oncology and number 3 is where we expect to be in 2030.

Next slide, please. Daiichi Sankyo's oncology performance has been driven by ENHERTU. In the first half of this decade, ENHERTU has become the most successful antibody drug conjugate ever and the most successful new oncology drug launched in the past 5 years as measured by revenue.

More recently, we have launched DATROWAY, our second ADC, which is performing well. As we enter the second half of this decade, we start from a position of strength, which will lead to even greater success in the 2026 to 2030 time frame. In 2026, ENHERTU is expected to obtain three new indications, including today's first-line HER2-positive metastatic breast cancer indication, followed by the HER2-positive neoadjuvant indication and then the HER2 positive post neoadjuvant indication.

DATROWAY is expected to receive its third indication expanding into the first-line triple-negative breast cancer segment. Behind ENHERTU and DATROWAY, our third and fourth DXd ADCs, I-DXd and R-DXd have received breakthrough designation from FDA. With our global oncology organization, now fully established, coupled with our 2 highly productive alliances and multiple new growth catalysts, the years 2026 to 2030 are poised to be a time of unprecedented oncology growth here at Daiichi Sankyo.

Next slide. Our oncology foundation is built on the strength of ENHERTU. ENHERTU has attained 7 indications. It has become the standard of care and achieve market share leadership in the HER2-positive second-line metastatic breast cancer indication, the HER2 low metastatic breast cancer indication, the HER2 mutant small cell lung cancer and the HER2 second-line gastric cancer indication.

Impressively, in every country where it has launched, it has become the market share leader and the new standard of care in less than 12 months. This performance is the result of ENHERTU's exceptional clinical profile and the strength of our medical and commercial organizations and our alliances. To date, almost 200,000 patients from across 85 countries have now benefited from ENHERTU.

Next slide. Global net sales in quarter 2 fiscal 2025 totaled JPY 163.2 billion. growing 24% versus the previous quarter 2. All regions are contributing to this growth, led by the United States with more than half of the total revenue. ENHERTU has made a historic mark in the community of oncology and is now poised to have an even bigger impact in 2026.

Next slide. The next 2 years are pivotal for ENHERTU as it will deliver multiple new standard of care changing data catalysts and new launches. In the metastatic breast cancer setting, as Ken Takeshita just outlined, ENHERTU will move earlier in the treatment sequence with today's HER2 positive first-line metastatic breast cancer approval based on DESTINY-Breast09. DESTINY-Breast09 is the first major improvement in the outcomes in the first-line HER2-positive metastatic breast cancer space in over 8 decades.

DESTINY-Breast09 launch will be followed by the expected approvals of DESTINY-Breast11 and DESTINY-Breast05 where ENHERTU enters the early-stage breast cancer setting where cure is the goal. ENHERTU is now at the stage where the launches of these new indications will cascade country by country, providing a constant stream of new growth catalysts throughout our upcoming sixth midterm plan. Importantly, these new growth catalysts layer on top of the existing remaining untapped opportunities of ENHERTU in the HER2 low metastatic breast cancer segment and especially the tumor-agnostic indication in the United States, providing substantial near-term growth upside.

Next slide. I'll now highlight each of our key growth opportunities in some detail, starting with the existing HER2 low metastatic breast cancer indication. The HER2 low and ultra-low indication was fully launched in the United States in Q1 of 2025, and it has become the new standard of care reaching 50% of patients in quarter 2. This growth is expected to continue in the U.S. as patients and oncologists experienced its substantial benefits in their own hands. And you'll see we've got many, many countries as shown in the bottom right-hand side of the slide that will be obtaining access and hence, will be launching our HER2 low and ultra-low indication across the globe more fully in the coming year.

Next slide, please. Now I will describe the opportunity for each of the new growth catalysts I've highlighted, starting with ENHERTU's HER2 first-line metastatic breast cancer indication that was obtained today. There are 24,000 patients in this indicated population across the G7 countries. Today, 30% of these patients never receive a second-line treatment, mainly because their disease advances too quickly to a point that physicians and patients decide to stop treatment. This insight underscores the urgent need to treat with the very best drug immediately.

This mindset is shared by the majority of oncologists across the globe. The remarkable benefits of ENHERTU in the treatment of first-line HER2-positive metastatic breast cancer cannot be overstated. In DESTINY-Breast09, ENHERTU in combination with pertuzumab reduce the risk of disease progression or death by 44% compared to the standard of care, taxol, trastuzumab and pertuzumab. ENHERTU provided over 40 months of progression-free survival, adding more than a full year free of progression compared to today's well-regarded standard of care that has been the standard of care for over a decade.

ENHERTU is viewed as the most efficacious drug in this setting by the overwhelming majority of oncologists. This belief, coupled with the urgency to treat with the best drug from the start, and the feedback from the oncology community that we received leaves us very confident that ENHERTU will be quickly embraced by the oncology community and become the new standard of care for these patients.

Next slide. Now adding to our growth opportunities in the HER2 low and the first-line HER2-positive metastatic breast cancer segment are these new data from ESMO, ENHERTU's DESTINY-Breast11, DESTINY-Breast05 in the early-stage breast cancer curative setting and DATROWAY's TROPION-Breast02 data in triple-negative breast cancer patients. All three of these trials demonstrated statistically significant and clinically meaningful benefits over well-respected current standard of care. Based on the feedback we received from the oncology community, we are optimistic about how fast and broad, these new indications will be adopted by the oncology community. And we are very confident these will all become the new standard of care.

Next slide. I'll now explain the magnitude of these opportunities and share what we're hearing from the oncology community about their expectations for how these drugs will impact the treatment landscape. In DESTINY-Breast11, ENHERTU demonstrated the highest pathological complete response rate ever reported in this population. Each pathological complete response is potentially another life saved. It is well known and accepted that patients who obtain a pCR have far better overall survival than those patients who do not.

In DESTINY-Breast05, ENHERTU in this high-risk population reduce the risk of disease recurrence by 53% compared to the well-respected standard of care. These trials are seen as practice changing by the majority of oncologists treating breast cancer. As you can see on the bottom right of the slide, 72% of oncologists in the syndicated survey said that these data will change how they treat breast cancer patients. And that is absolutely consistent with what we've heard in all of our discussions with key opinion leaders, all of our advisory boards and our own market research.

In the G7, there are 29,000 patients in the DESTINY-Breast11 expected indication, and there are 11,000 in DESTINY-Breast05. ENHERTU adoption in these early-stage breast cancer patients brings the potential to have its greatest impact of all to potentially cure more patients.

Next slide. In fiscal '26, ENHERTU has 5 major growth catalysts we'll be focused on. We believe ENHERTU's clinical profile creates the mandate for us to make ENHERTU the new standard of care for each of them. Number one is the remaining HER2-low opportunities. Number two is the new DESTINY-Breast09 HER2-positive first-line metastatic breast cancer indication. Three and 4 is the expected early-stage breast cancer approvals of DESTINY-Breast05 and 11. And number 5 is the remaining untapped opportunity for patients in the HER2-positive tumor-agnostic indication in the U.S. We are confident ENHERTU is at the beginning of its biggest growth phase to date.

Next slide. I'll now transition to an update on DATROWAY, our second DXd-ADC. Global DATROWAY net sales have now exceeded JPY 10 billion in quarter 2. In the U.S., quarter 2 revenue was JPY 6.6 billion, growing 113% versus the previous quarter. In Japan, Q2 revenue was JPY 3.5 billion, growing 59% compared to the previous quarter.

Next slide. In the U.S., DATROWAY is approved for HR positive HER2-negative metastatic breast cancer patients and EGFR-mutated non-small cell lung cancer patients. In Japan, it is the first TROP2 ADC approved for our HR positive, HER2 negative metastatic breast cancer patients. Early experiences as reported by oncologists have been extremely positive in both regions. Oncologists are becoming more and more comfortable and confident every time they prescribe this medicine. These early experiences will benefit DATROWAY greatly when it receives its expected triple-negative breast cancer indication. The clinical data in triple-negative breast cancer is viewed as best-in-class by most oncologists, and we believe it has the potential to become the new standard of care.

Next slide. So let's talk a little bit about the expected triple-negative breast cancer indication. For nearly 15 years, there has been no new treatment advances in first-line metastatic triple-negative breast cancer for patients who are PD-L1 negative. Metastatic triple-negative breast cancer is the most aggressive breast cancer subtype with the fewest treatment options. 5-year survival is only 14.9%. There are 16,000 patients in the G7. 1 out of 2 patients never received a second-line treatment. So there is a big urgent unmet need.

DATROWAY's TROPION-Breast02 trial demonstrated a statistically significant and clinically meaningful improvement in progression-free survival. It uniquely delivered a statistically significant improvement in overall survival. It doubled the overall response rate. And we shouldn't forget that DATROWAY provides very convenient Q3-week dosing, which is a significant advantage compared to the other TROP2 ADC in the market.

Next slide. The feedback has been universally positive. The doubling of overall response rate, which is unique to DATROWAY, coupled with the unprecedented overall survival improvement which is unique to DATROWAY, the impressive progression-free survival, the excellent safety profile, have the oncology community eager to adopt DATROWAY and makes us confident it will experience a rapid uptake and has potential to become the new standard of care.

Next slide. With ENHERTU and DATROWAY's current indications and expected future indications, these two ADCs can potentially improve outcomes for 100% of metastatic breast cancer patients. Our goal is to be the premier company in the eyes of the breast cancer treating oncology community. Next slide. On top of all of the anticipated launches in 2026 and '27, we will see the results of a number of important DATROWAY lung cancer trials. These trials target extremely large patient populations and hold the potential to transform the treatment of lung cancer.

The DATROWAY clinical development program, depending on the success of the trials shown on this slide has the potential to benefit an even greater number of patients than the very robust ENHERTU clinical development program.

Next slide. This is the full picture of where Daiichi Sankyo is going. In the past 5 years, we have made a successful transition into oncology. So we start our next 5 years from a position of strength. Daiichi Sankyo has now reached a data-rich growth catalyst-rich moment with four new highly meaningful new indications expected for ENHERTU and DATROWAY in 2026. Behind these, there are numerous other new pivotal trials reading out over the next few years, as shown in this slide. This clinical development program creates a continuous stream of new launches across at least four ADCs every year through 2030. These pivotal registration trials offer the opportunity to help nearly 6x as many patients live longer, better quality lives and even bring more cures to patients across the global oncology community.

Next slide. We are more confident today than ever before that our work over the next few years will cement Daiichi Sankyo's position as a true global oncology leader.

I will now hand the presentation over to our Head of Global Technology, Hiroto Kashiwase.

[Interpreted] Thank you, Ken. Please go to the next slide. First, regarding the development status and stable supply system of the five DXd ADCs. As was already explained in the previous part, with respect to ENHERTU since its launch in 2020, demand has been increasing at the pace exceeding expectations. Our technology unit has been suitably building a supply system to respond to this rapid increase in demand while continuing stable supply.

As for DATROWAY, it was launched this year in Japan, the U.S. and Europe, and we are building an appropriate stable supply system while monitoring market trends and development status. In addition, for I-DXd and R-DXd, favorable clinical trial data have been accumulated. And we are currently constructing a global supply system capable of responding to the future peak demand of the entire five DXd ADCs.

Please go to the next slide. Here is a supply strategy for the 5 DXd ADCs. Since this overlaps with last year's Science and Technology Day, details are omitted. But regarding the expansion of capacity, we are enhancing production capability through capital investment and building a global supply system. Regarding the improvement of the capability, we are enhancing productivity by leveraging technological strengths, fostering and strengthening biotechnology talent and transforming into a highly productive organization. By skillfully linking these two axes, we aim to maximize ADC supply volume and secure the necessary supply volume.

Next slide, please. Here is a general manufacturing process of ADCs. ADCs consists of multiple components, such as drug, linker, antibody, ADC drug substance and ADC drug product and each component is manufactured and managed separately. Compared to conventional small molecule drugs, the manufacturing process is more complex and the lead time becomes very long. Therefore, in order to secure supply volume that can meet future demand, it is necessary to start manufacturing planning adjustments and preparations at an early stage. In the stable supply of ADCs, one of the most difficult points is to appropriately manage the balance between supply and inventory in line with regulatory and changing demand.

Next slide, please. This is a schematic representation of the manufacturing and the supply routes of ADCs. Among the ADC manufacturing processes, the steps of antibody ADC drug substance and drug product have a large impact on quality and recognized as critical processes. Therefore, focusing on these three processes, we are building the manufacturing systems at multiple sites of our company or CMOs and by considering filing strategies and the supply strategies, we combine them to secure multiple supply routes. Such a system not only secures supply capacity to respond to rapid demand increases, but also reduces supply risk since even if an unexpected trouble cost at one manufacturing site and the supply just stopped as supply routes can cover it.

Next slide, please. Next, I will explain the policy on utilization of our facilities and CMOs. The graph on the right shows an image where the gray area indicates demand forecast and the back graph shows supply capacity combining our in-house and CMO manufacturing capacities. We always compare the latest demand forecast with supply capacity, judge the necessity of capital investment or outsourcing manufacturing to CMOs and work to ensure that supply capacity consistently exceeds demand.

We also consider the balance between our in-house manufacturing and the CMOs to be important. Since it takes a very long time to construct new buildings and start-up production lines in-house, in the short term, we prioritize speed and effectively utilize CMOs with existing facilities to secure supply capacity.

On the other hand, in the medium to long term, considering cost and stable supply, we gradually increase the proportion of our facilities, aiming to eventually build a balanced supply system between our in-house and CMO capabilities. Regarding the final manufacturing ratio between in-house and CMOs, we refrain from disclosing it. However, from the viewpoint of BCP, utilization of CMOs is one of the important elements, and we will make comprehensive judgments based on the respective advantages and disadvantages.

Next slide please. This slide summarizes our in-house global ADC manufacturing sites. Currently, the Daiichi Sankyo Group as a whole has 13 manufacturing sites globally. Among them in Japan, we have 4 sites: Onahama, Tatebayashi, Hiratsuka and Odawara. Globally, we are building or planning ADC manufacturing systems at 3 sites: Pfaffenhofen in Germany, Shanghai in China, and New Albany in the U.S. Regarding specific numbers of CMOs and related information, we refrain from disclosing them. However, we are building supply systems in close collaboration with multiple CMOs mainly in Europe and the U.S.

Next slide, please. Now I will explain the status of building supply systems for each component. First, regarding antibodies. Since there are a considerable number of CMOs capable of manufacturing, at present, we are effectively utilizing the speed and the technology of CMOs to secure the necessary supply capacity. In the mid- to long term, our policy is to strengthen in-house manufacturing and aim to build a low-cost and stable supply system. In fiscal year 2024, an antibody manufacturing facility with 15-kiloliter scale bioreactors was completed at the Onahama plant and the preparations are underway for stable manufacturing.

Next slide, please. Twice the production capacity will be there. And also, we are currently constructing Pfaffenhofen plant in Germany. Completion of this facility is targeted for fiscal year 2028.

Next, the supply system of ADC formulation. Regarding the drug product, considering factors such as product transportation costs, we are establishing a supply system in each region with a focus on local production for local consumption. Domestically, the Hiratsuka plant already possesses multiple formulation lines, and we are exploring ways to increase production volume and expand our product portfolio. A new formulation line is scheduled for completion at ARI, our New Albany plant in fiscal year 2026, with plans to expand the U.S. production capacity accordingly. Furthermore, construction of new formulation lines is also being advanced at the Pfaffenhofen plant in Germany and Shanghai plant.

Next please. Efforts are also underway to establish a one-stop production system. Right now, the various components of ADCs are manufactured at various sites globally, but consolidating key manufacturing processes at a single site is expected to reduce transportation times between manufacturing sites and enhance production flexibility, which would enable more efficient production.

Already at the Onahama plant, an integrated manufacturing system from antibody to active pharmaceutical ingredients, namely drug substance has already been established within the same building enabling efficient production. Also at the Hiratsuka plant, once the drug substance manufacturing building is completed and production commences, an integrated manufacturing system for drug substance to drug product and packaging is scheduled to be realized.

Next, I should briefly outline our initiatives developing and strengthening our biotechnology workforce. The development and stable supply of ADC products necessitates the cultivation and strengthening of biotalent possessing specialized knowledge particularly in the manufacturing domain as production volumes increase, the required man hours are projected to rise further, securing manufacturing personnel and accelerating the development. And this has become an urgent priority.

So to that end, we're actively pursuing measures to cultivate and secure the necessary biotechnology personnel. And these include strengthening recruitment activities, early development and enhancement of manufacturing operators through training programs and seamless personnel exchanges across organizational and functional boundaries.

As an example, I will now go into details about the actual training program. For antibody manufacturing personnel, we have established a training environment dedicated to operator development. We have formulated training programs, utilizing these facilities enabling the efficient development of biotech personnel. Specifically for newly assigned personnel such as new recruits and transferees, we combined theoretical instruction lectures and practical training at the laboratories scale. This supports the early acquisition of the knowledge and skills required on the production floor, enabling us to develop personnel who can contribute immediately on site.

Separate from this program, each manufacturing site also conducts GMP training and OJT training and other educational initiatives, which enable personnel to become involved in actual production as manufacturing operators within approximately 6 months. whether to respond more swiftly and efficiently to tasks related to ADC development and supply. We are optimizing the organizational structure of the technology unit.

And our primary production focus is shifting from small molecules to oncology and novel modalities. Approval processes have been accelerated and because of that time frame from formulation technology development to the commencement of commercial production has been consequently shorter necessitating reduced lead times. So to address these challenges, we determined that integrating responsibilities from clinical trials, commercial production, together with enhancing information sharing and collaboration was essential.

So we have decided to transition from the previous structure where clinical trials and commercial production were separate to an integrated organization. In fiscal year 2023, we integrated the Biologics division, Pharmaceutical Technology division and Supply Chain division to establish a technology unit capable of providing end-to-end support across the broad spectrum from early development to commercial production.

In fiscal 2024, we reorganized functions to create a more efficient structure for advancing our ADC business by establishing 6 functions within the unit. Further in fiscal 2025, we absorbed and merged the production function companies Daiichi Sankyo Pro Pharma and Daiichi Sankyo Chemical Pharma further strengthening collaboration in production functions. Going forward, also we intend to continue examining and implementing optimization to organizational functions to deliver innovations to patients worldwide as quickly and reliably as possible.

Next, please.

[Interpreted] Thank you. I am Abe, Head of the R&D division and Head of Global Research. I will explain the research part. Next slide, please. Our company building on strength in small molecule drug research and development has long engaged in antibody drug research. Currently, under multi-modality strategy, multi-ADC strategy, we are promoting new drug launch using the various approaches such as antibody drugs, including ADCs, mid-size molecule drug discovery, nucleic acids, gene therapy, glycan engineering and mRNA vaccines.

In the ADC platform, we have created multiple new ADC technologies, including DXd ADC. By utilizing the various modalities, we are working daily to continuously create innovative medicines that can transform standard of care across a wide range of disease areas, including cancer.

Today, I will introduce some of our new drug research as part of our efforts toward the next innovation. First is ADC. I will present the direction of new ADC technology development based on the success of DXd ADC. Second is cancer immunotherapy or immuno-oncology research. In parallel with ADC as a result of more than 10 years of research, we have started clinical trials of multiple assets. And I think this is the first opportunity to present them altogether.

Third is the combination strategy of ADC and immuno-oncology therapy. As Takeshita explained in the development part in clinical trials, for example, the combination effect of Dato-DXd and immune checkpoint inhibitors has been observed. Our preclinical experimental data are now being validated in clinical settings. Fourth is new modalities. And finally, I've introduced smart research laboratory and our open innovation activities in research.

Next, please. Now I'll introduce DXd ADC and new concept ADC technology platforms. Next slide please. As we have introduced several times, DXd ADC technology is considered one of the outcomes of the merger between Sankyo and Daiichi Pharmaceutical. At Sankyo, since the 1990s, former head of R&D, Agatsuma and others began antibody drug research. At Daiichi Pharmaceutical at the same time, research was conducted on new drugs of the topoisomerase inhibitors and the drug delivery systems.

With the merger in 2007, these insights were integrated. And in 2010, it developed into cross-functional activities for ADC research. At that time, I was assigned by Agatsuma as research team leader and together with fellow researchers created DXd ADC technology and the ADC portfolio. The strong desire to deliver excellent new drugs to patients and commitment to manufacturing and innovation are part of Daiichi Sankyo's continuing research culture. I believe this environment nurtured many research leaders and became the driving force behind the creation of ENHERTU.

Next slide please. As you know, DXd ADC technology is Daiichi Sankyo's proprietary platform and currently clinical trials are being conducted with 7 ADCs. At the time of research as a working hypothesis, topoisomerase inhibitors were generally not used for breast cancer. Therefore, we advanced research with the idea that delivering that Daiichi Sankyo's proprietary topoisomerase inhibitor through ADC technology could become a breakthrough new agent.

We also succeeded in developing technology to launch 8 drug linkers or antibodies. And for ENHERTU and DATROWAY, which were developed ahead, we obtained approval in breast cancer. We have also launched research programs for other ADCs while formulating working hypotheses regarding which cancer types they may be effective against. For example, DATROWAY has been approved for EGFR-mutated NSCLC and I-DXd has demonstrated favorable clinical data in SCLC and R-DXd has shown promising clinical results in ovarian cancer, leading to breakthrough therapy designation. More recently, DS-3790, which targets hematologic malignancies, has advanced to the clinical stage. We are hopeful that it will also demonstrate strong efficacy in hematological cancers.

At an external evaluation of the DXd ADC technology, we have received FDA breakthrough therapy designation for a total 13 indications to date. In recognition of achievements demonstrated in clinical trials, as shown earlier by Okuzawa, we were honored this fiscal year with the best ADC platform technology award at the World ADC Awards.

Next please. Furthermore, Daiichi Sankyo's ADC technology continues to evolve across each of its components, antibody, linkers and payloads, as the Takeshita mentioned, development of novel technology, antibody technologies to enhance target selection, Fc engineering and tumor specificity. And in the middle, new conjugation technologies that enable strict control of the DAR for linkers and exploration of a diverse range of payloads with mechanisms different from DXd are underway. Our strengths lie in over 15 years of ADC research and deep expertise in antibodies, linkers and payloads. We will continue to generate novel concept ADC technologies and lead the ADC field going forward.

Next, please. As next platform candidates applying DXd ADCs, we have mPBD ADC technology using modified PBD as a payload as well as the STING agonist ADC technology, based on cancer immunology concepts. The first asset entered clinical trial stage. If clinical utility is demonstrated, we will proceed with the development of second and third assets, utilizing these ADC technologies. Should further improvements be required, we will address and overcome the challenges. We are also researching additional novel concept ADC technologies, and we introduce them as they start clinical trials.

Next please. I will explain our cancer immuno-oncology research assets and their combination strategies. Why do we invest in IO? Immuno-oncology therapies exemplified by immune checkpoint inhibitors have been reported to provide durable effects in suppressing cancer recurrence, which is thought to be attributable to the immune memory. In addition, they offer new treatment opportunities even for tumor types with low sensitivity to drugs. Furthermore, through complementary pharmacological effects by combining IO with DXd ADCs, we would like to aim for cure to cancer.

Next, please. During a decade of research, as I mentioned earlier, we have identified various molecules involved in cancer immune activation signals as drug targets and have generated multiple development candidates and established our proprietary IO franchise. Today's disclosure covers only part of this. But as is illustrated in this slide, we are working to activate cancer immunity against tumors through various mechanisms, including the increasing novel cancer antigens, activating antigen-presenting cells and recruiting activated T cells.

In building an IO franchise, we have adopted a multi module strategy, advancing drug discovery using the optimal modality for each target molecule. For instance,DS5361 is a small molecule compound, DS-1103 is a monoclonal antibody, DS-3610 is a novel IO targeting ADC and DS-2243 is a T-cell engager. As DXd ADC induce cancer apoptosis and serves as the trigger for tumor immunity, we anticipate that drugs within the IO franchise will offer complementary effects when used in combination with DXd ADCs in addition to the monotherapy applications. Furthermore, there are multiple research themes at the investigational stage and we will also introduce them when we start the clinical trials.

Next please. From within the IO franchise, I will now introduce DS-3610. DS-3610 employs novel ADC technology concept utilizing our proprietary STING agonist as the payload. The STING agonist is selectively delivered to the tumor tissue, activating antigen-presenting cells within the tumor microenvironment to promote T cell priming. And in nonclinical studies, we have confirmed that sustained antitumor effects based on immune memory and synergistic effects with multiple drugs have been confirmed.

The concept involves avoiding systemic immune activation by incorporating the STING agonist into the ADC while modifying the antibodies Fc domain to suppress antibody-dependent cytokine release. We believe that this design achieves the balance in ADCs with both immune activation and safety. And FIH already has started last month.

Next, I will briefly introduce the progress of drug discovery methods using novel modalities. Now in the development section, Takeshita already explained this, but we have started the clinical trials for a new modality and medium-sized protein degrader. So while compounds that degrade target proteins has been reported by other companies aggressively. We have selected the first in line first-in-class novel target and advancing this development as a TPD.

We also have multiple projects in preparation at the nonclinical stage and intend to collaborate between the research and development teams to cultivate this into one of our new core technology platforms.

Finally, I will introduce the Smart Research Lab, which will form the next-generation research infrastructure and you also get direction for open innovation. Our company has long prioritized machine learning and AI-driven drug discovery as a history. Currently under the concept of Smart Lab, researchers themselves are undertaking initiatives to transform the drug discovery process. Essential to this effort is AI-driven drug discovery, high-quality and large-scale experimental data and we are advancing the utilization of this data.

We think that the Smart Lab will form the foundation for AI-driven drug discovery. So for this purpose, we established the Smart Research Lab in San Diego this January. At the Smart Research Lab, robots and automated experimental equipment operate 24 hours a day, 365 days a year with plans to generate large volumes of high-quality data. And we have selected and dispatched professional drug discovery researchers from our Shinagawa and Kasai Research institutes to the Smart Research Lab. And as one team, we are establishing the lab with talented IT engineers, W.e plan to start the work from next fiscal year.

While the Smart Research Lab will be our first in-house drug discovery research facility in the U.S., it will also enable remote experimentation and data analysis from within Japan as well. So I explained before as well, but molecular design using AI has already been pursued vigorously at the Shinagawa Tokyo Research Institute. We will tackle new drug discovery through a hybrid model, combining the San Diego and Tokyo efforts.

Finally, I will introduce our open innovation activities at the research stage. Last year, we established Research Institute in Boston and Munich. The key European and American clusters for drug discovery model is basis for external collaboration. Further, this fiscal year, we opened a new research institute in San Diego to access the drug discovery cluster on the U.S. West Coast.

So Daiichi Sankyo is now advancing collaborations with external institutions in over 10 countries globally centered in existing Tokyo, Shinagawa and Kasai facilities. Top scientists from Shinagawa and Kasai are also dispatched to these research institutes, actively promoting joint research and sponsored research with academia and start-up companies. So further collaboration between these bases enables global information sharing and strict compliance with the regulatory requirements of each region.

Regarding the focus of this research institute, we are not considering the introduction of clinical stage pipelines, but we are concentrating our early-stage research into novel biology and the discovery of new modalities. By swiftly incorporating the new science and technologies in emerging daily within the Western drug discovery ecosystem and integrating them with Daiichi Sankyo's strength and expertise, we will create new opportunities for drug discovery.

Next please. Our strength lies in the trust sciencemanship based technology and science culture. Our drug discovery achievements, including ENHERTU, DATROWAY, TARLIGE,, LIXIANA and EFIENT are underpinned by precision in manufacturing down to the finest detail. Moving forward, our researches and employees will unite to deliver new value and superior medicines. Craftsmanship is a spirit of manufacturing deeply rooted in Japan's tradition. So even as we globalize, we will propagate this culture, pursue science and technology that embodies Daiichi Sankyo's identity and deliver medicines to as many patients as possible and persist in our challenge towards the lofty goal of curing diseases. Thank you.

[Interpreted] [Operator Instructions] The first question is from Yamaguchi-san, Citigroup.

[Interpreted] This is Yamaguchi from Citi. I have two questions. First question goes to Ken Keller-san. This time in Science and Technology R&D, you mentioned the gave explanation about marketing especially DATROWAY opportunity details were given in the presentation. Regarding ENHERTU, within 1 year since the launch, you had achieved the marketing share over 50%. What is the trend we have seen regarding the market share obtained by DATROWAY? And also, I believe that there will be more coming data available for DATROWAY. Can we expect that the same trend will be followed by that DATROWAY like ENHERTU? And also if you have any peak expected sales number, please. also let us know.

Yes. Thank you for your question. So the early uptake of DATROWAY in both Japan and the U.S. has exceeded our expectations. It's a little bit different in both markets. In the U.S., we've got about 50% of the use in the breast cancer indication. And about 50% of the use in the lung cancer indication. In Japan, it is the only TROP2 approved for HR-positive, HER2 negative, and so a lot of it is the breast cancer indication, obviously.

In terms of what we expect, we expect that the triple-negative breast cancer indication for DATROWAY is going to be very well received. As Kashiwase-san mentioned earlier, the data is truly unique. DATROWAY demonstrated a doubling of the overall response rate. That's unique to it. It demonstrated an improvement in overall survival. That is unique to DATROWAY. The safety profile was excellent as well. And I mentioned the Q3 dosing is more convenient than other options. So we are very confident that DATROWAY will become the new standard of care in the first-line triple-negative breast cancer space for those patients that are PD-L1 -- not able to receive a PD-L1 drug.

The data is truly excellent. And I think all the positive experience from the two existing indications will serve it very well in terms of physicians being comfortable with it from day 1. I hope that answers your question.

[Interpreted] I have another question to Abe-san. In Takeshita-san's section, on Page 25, new ADCs, 3 of them were introduced. And of that, two are new DXd ADC. Another one [Technical Difficulty]. Should I repeat the question?

[Interpreted] Well, I am, yes, now looking at Page 25. May I answer it? Could you repeat your question please?

[Interpreted] Well, new ADCs, there are 1, 2, 3, three of them. I'd like to ask you to explain what are the differences amongst these 3? And what are the specific targets of each?

[Interpreted] Yes. And so there is the new ADC 1, 2 and also at the bottom ADC 3. So the modified payload or the new ADCs. This is new list of DXd ADCs. So with that new concept, it's being promoted in the research. Although I cannot disclose the details, the tissue selectivity meaning that it is more cancer-specific delivery system or within cells more durable effect can be demonstrated. These are what we are targeting to achieve with these ADCs. Although I cannot give you more details. When it comes to the clinical trial stage, we will give you more details.

And also, the third one is a new payload ADC. And that MOA is different from 3 ADCs that we have introduced to you. We have started researching this new payload and research is going well. So at the time that all those assets start clinical trials, we will give you more details. But I think highly likely, I believe that all those 3 programs, we'll be able to move on to the advanced stage in clinical development.

[Interpreted] And if it's all right, can we expect that these will be entering into the clinical stage within several years?

[Interpreted] Well, if we can, then we may say so. And all the research development and matching units are doing our best efforts so that we'll be able to promote the implementation with the plan.

Next question, please. Daiwa Securities, Hashiguchi-san, please.

[Interpreted] Hashiguchi speaking. The first question is to Abe-san or Okuzawa-san. Fifth MTP 2021 announced as one of the objectives post DXd ADC selection. That initiative, in today's presentation, how much is that reflected DXd ADC franchise? I see that as a large backbone pillar just one of that rather than that with the various initiatives that you have introduced today a sustainable growth you're going to achieve, is that the understanding? Or within what you have introduced a post-ADC modality? What is expected as a major pillar, the franchise whether there's a possibility that, that is included as well? So within what you have introduced the weight, the difference of weight, whether there are any or not, we would like -- I would like you to comment, please.

[Interpreted] So from Abe, I would like to respond. Thank you very much for the question. Now, I personally feel that DXd ADC-like platform technology can be built and we do have that confidence. But the IO research taking 10 years, there are a lot of development candidates. So not only one, but multiple number of platforms or franchises, we will be building the pipeline, I think.

And what is the pillar of that? Well, this time, I would like to refrain from clearly responding. But in our research division, we do have confidence that we could advance this forward. I would repeat but in today's asset, we are expecting the IO assets and then protein degrader with that we are starting the clinical trial so that we have a research structure as well as achievement that we could lead it to the next stage. And new ADC we are expecting for also. So I don't know whether this is an answer to you, but not only one but we think that we'll be able to build multiple numbers of platform. But on the other hand, as you know, up until 2030, DXd ADC, the business, we will further expand the business. Under such circumstances, these new initiatives that have been rolled out. Please understand that. That's all from me.

[Interpreted] The second question is also the question directly to Abe-san. As you mentioned earlier, on Page 25, new ADC 123, for these, the target, for instance, had 2 or TROP02 like that, the conventional DXd ADC. It's the same as that but a further stronger efficacy safety targeted ones are included or the first DXd ADC, the new targets that you were not able to obtain. And for those new patients, it's a kind of effort for you to provide a treatment option, which is closer to what you are aiming at as a company?

[Interpreted] Thank you very much for your question once again. If I say all, you might say we're doing too much. But there HER2 areas, with that herceptin and Kadcyla, the standard of care, and those were used as SoC for 10 years and 20 years, we're in the process of reforming it and changing it. On the other hand, our research lab is working so that the ENHERTU's challenges could be overcome, even as they are working on the drug development. And also what we have not done and the diseases that we have not been able to provide cure, there are many such in existence. Therefore, for the new target for them or for new tumors, with that objective, we are working on developing and discovering drugs, which address pain. And we are working on both of those that you have mentioned.

Wakao-san from JPMorgan.

I have two questions for Takeshita-san. Firstly, Page 20. I'd like to ask about the potential in proportion of the QCS methodology into the TL-07 and TL-08. We understand from our discussions that you have been discussing with the FDA about the potential use of QCS NMR in TL-07 or 08. Could you provide an update on the status of these discussions and whether any conclusion has been reached? If QCS were to be incorporated, should we understand that it used to be limited to that respective? Or is there a possibility of prospective integration? In addition, I appreciate your perspective on whether other benchmarks to be considered acceptable or supportive in the context of regulatory review. This is the first question.

Yes. Thank you very much for that question. So in terms of where we stand on NMR or also known as QCS incorporation into our lung cancer studies, we are in discussion. And so once we have some conclusions, we will be able to report them to you. But unfortunately, not today, but perhaps in the future.

When can I hear the conclusion?

Well, I don't have a specific date for you. But as you know, we already have reported that the top line results of the TL-07 will be available sometime in the next fiscal year. So certainly, we need to have these issues about NMR concluded some time before we see the top line results for TROPION-Lung07.

Second, about ENHERTU, Page 11. I would like to ask about the development of the drug ENHERTU in earlier line settings for the HR-positive population, including neoadjuvant, adjuvant and PD. Could you share what discussions you are currently having with AstraZeneca regarding development in these settings? Over the past years, you have indicated that you have been assessing the potential in this area. But there have been no update. Does AstraZeneca have limited interest in developing ENHERTU in these settings? Or are you considering by doing development in this space using products other than ENHERTU?

Yes. So I think your question refers to the bottom half of the slide, the hormone receptor positive patient population. Is that correct?

Yes.

Okay. So no, this is a patient population that is in the adjuvant, neoadjuvant setting, et cetera. Much of the work is really being done through endocrine-based treatments. And so other than some exploratory studies that we are conducting, we just need to wait to see how much progress we can make using even a drug like ENHERTU that is quite corrective in the neoadjuvant, adjuvant space because these are -- in these earlier lines of therapy, hormone receptor positive breast cancer is typically less sensitive to drugs like chemotherapy or even ADC, a more responsive to endocrine therapy. So at the moment, what is stated here about evaluating the potential or preparing study plans is unchanged.

[Interpreted] Next question, Matsubara-san of Nomura Securities, please.

I'm Matsubara of Nomura Securities. So I think the NMD, not only actions in messenger RNA quality control, but also plays a role in degrading the gene expressions. So is there a risk inhibiting an NMD could cause off-target effects such as an unintended change in gene expressions or activation of abnormal metabolic pathways?

Okay. So this is a very -- you're asking a very interesting biological question. So in a normal cell, certainly, there are termination codons. These are not premature termination codons, but just regular termination codons. For reasons that are still not completely clear the messenger RNAs with standard termination codons, are unaffected by NMD inhibitors. That is to say that if you have a regular standard termination codon in your messenger RNA, that does not undergo mRNA degradation.

It is these premature termination codon as a result of, for example, frame shift mutation that is specifically affected through this mechanism called mRNA degradation, which we are inhibiting with this NMD inhibitor. So what is expected is that this NMD inhibitor would not substantially affect the normal cells with its own set of mRNA termination codons, but have a selective effect on tumor cells that have these premature termination codons.

[Interpreted] Next question. Morgan Stanley -- MUFG Securities, Muraoka-san, please.

[Interpreted] Muraoka of Morgan Stanley. My first question goes to Okuzawa-san. Here in your today's presentation at Daiichi Sankyo today, you have all those assets and you need such a set of assets, I could understand it very well. But the question is about the external resources and collaboration that you have been touching upon from this spring from time to time. You do have your in-house resources, but based upon presentations made today, by when, at which scale you'd like to incorporate external resources? Could you tell me those once again?

[Interpreted] Thank you for your question, Muraoka-san. My answer is that within the sixth 5-year business plan, we'd like to clarify those and would like to let the investors and analysts know.

And as the business scale, expands and as we rapidly have been growing, we would like to further strengthen our approach toward the future growth. And as we have introduced, we have quite rich growth catalysts in-house and we are always watchful of potential external opportunities.

And it is going to be a new 5-year business plan. Therefore, growth drivers see both in-house and outside. In order to effectively obtain those and make use of them, we would like to establish a management system supporting those within the new 5-year business plan. Therefore, at an appropriate timing, we would like to provide you a discussion.

[Interpreted] So it will be probably prior to a 5-year business plan. So within 3 months, I think my understanding is that you will be able to give us an update by that timing?

[Interpreted] Yes. In the next fiscal year, for sure, yes. We will explain about our new 5-year business plan.

[Interpreted] Next, I would like to ask a question probably to Abe-san, Abe-san or Takeshita-san but also probably to Abe-san regarding the new protein degrader 9051, it is midsized molecule. Is it oral or injectable? And what is the desirable administration routes? I think Astellas has been working on the injectables and target disease might be different, but KT-646 showed very positive data, oral administration to my surprise. So other companies demonstrating very positive data, what kind of differentiation available with your 9051. Probably the target disease is different, but could you tell us a little more?

[Interpreted] Thank you for your question. Concerning this program, please give us a little more time so that we'll be able to give you more details later on. And whether it's oral or injectable, we have been conducting researches on multiple routes. And oral is considered to be better but the injectable has its own benefit, like every 3 weeks or every 4 weeks dosing may be available. Or if it's oral, on a daily basis, the patient would be able to take it. Therefore, what's most important is in that targeted disease, what kind of treatment is being provided and compared to the existing one, we should demonstrate something superior or more advantageous.

So including that, we have been conducting research. So these different formulations or administrative routes we have been researching. And I myself consider and believe that this asset will become a very good drug. Sorry, I cannot give you specific answers, but could you get what I wanted to say?

[Interpreted] Yes, I could get the nuance very well. But just to reconfirm what you said, newer molecule, well, naturally, it includes injectable, but also potentially, it is possible to make it in oral, right? And especially, it is CRPC-9051, and it's going to be long-term administration. Therefore, naturally, in my view, I think this should be oral. Can I say that my idea is not much different from yours?

[Interpreted] Well, I appreciate it thinks that way. And in the next fiscal year, we would like to take opportunity to introduce this. So I believe that this is going to be excellent product and that we would like to continue research efforts.

[Interpreted] Next question, Jefferies Securities, Barker-san please.

Steve Barker from Jefferies. My questions are both for Ken Takeshita. The first question with reference to Page 9 and 10. Company obviously has a lot of history with ADCs. There's a narrative in the stock market that some other companies, which are developing a lot of ADCs on their own very rapidly, they don't have the same level of history, but the idea is that they can run clinical trials much faster and therefore, should be able to catch up and overtake Daiichi Sankyo in ADCs. Would you like to comment on that, please?

I hope you understand that we have already reported Phase III clinical trial data outcome in many of these diseases and in many different types of patient segments. For example, in breast cancer, we have all kinds of approvals now and positive data not just ENHERTU but also actually the TROP02 ADC. And so I think just -- if you -- because you referred to Slide 9, if you look at TROP02 data, for example, I think we are very, very competitive. And even if we compare to other TROP02 ADCs that have already reported their Phase III data, we believe that we are very competitive and in many ways, better set of clinical trial data, more clinically meaningful than other competing drugs.

So I think that we are -- I don't know, I hate to brag, but I think we're quite ahead of other competing TROP02 ADCs and other ADCs in general. I think it's made really a time element that's here as well as the big set of clinical trial data that shows that there are -- even with the same TROP02 targeting ADC, there are very important clinical data and safety data differences between this one that way versus other ones as well as what's listed there in the middle, more convenient administration schedule. I think that's important too.

But then presumably also for new types of ADCs, your long history with this modality should give you an advantage, you should be able to come up with new ADCs ahead of the competition, I should think?

Yes. So yes, that was, I think -- sorry about that. I think that was the second part of your question. And as I alluded to, these ADCs are really modular drugs. And by creating a different combination with these 3 modules, you can create new ADCs with different properties. That is one of our biggest research advantages compared to other companies that are mostly buying a single ADC drug for further development. And so as you saw earlier, we are producing next-generation ADCs with different payloads. And in the future, we expect to have more ADCs with yet more different payload or linkers or sometimes engineered antibody the binding target. So this is really our strength here. And if you ask us what is different about our ADC program compared to others? This is one of them. This is one of our biggest differentiating factors compared to other companies.

[Interpreted] Next question. Sogi-san, Sanford C. Bernstein.

I have two questions to Dr. Takeshita. So first one is DATROWAY's TROPION-Lung15, that is slated to be read out next year. This is for second-line EGFR-mutated non-small cell lung cancer. We understand that you are testing DATROWAY as a monotherapy as well as the combination with TAGRISSO versus chemotherapy. And first of all, we believe that this is a really important study for DATROWAY, the commercial opportunity as well as the exciting opportunity because the top 2 targeted ADC have shown really promising the efficacy so far. And so we believe that this combination approach with the TAGRISSO is a differentiating part for DATROWAY comparing to Merck's Kelun's, the SAC-TMT, which is currently only tested as a monotherapy.

But on the other hand, there is -- there are overlap the adverse event, the profile between DATROWAY and TAGRISSO notably for stomatitis and also ILD. We'd like to understand what do you understand this overlapping AE profile in terms of the safety risk for this combination? And would you actually think that the monotherapy is more in a base case success scenario from this trial and the combination is more the upside opportunity?

I think ultimately, it's going to be the clinical data that will tell us which is more important, the monotherapy or combination. It's also -- obviously, with the monotherapy, you could expect to see less toxicity. But with a combination, we might expect to see even additional efficacy beyond just monotherapy. But as you pointed out, there's a potential for additional safety concerns. So ultimately, I think we're going to have to see the totality of both clinical data including efficacy and safety to make some judgment in terms of a risk benefit, not just for regulatory agencies, but also for the prescribing physician.

Is it correct to understand that currently, you don't have any supporting clinical data to understand the potential safety profile for the combination?

So we are doing those clinical trials right now, yes. So we have some understanding.

Okay. Great. And then there's another question regarding HER3 DXd. Okuzawa-san mentioned that you continue to explore the HER3 DXd opportunity. And we also understand the HER3 first of all, target has been of great interest among the oncology drug development. On the other hand, it's been quite elusive. And we'd like to understand that as you continue and we understand you are exploring the biomarker approach to achieve the better patient selection. Have you actually had any kind of initial success? Or where you stand in terms of understanding how to approach HER3 patient selection strategy? Have you had any kind of design of the optimism, what you have achieved with the DATROWAY NMR?

Yes. So as you know, with the HER3 program, there are a couple of big indications of interest, breast cancer and lung cancer. And the breast cancer data that we are -- the bulk of the early breast cancer data that we have is from our collaboration with the French Group IGR and they have produced all kinds of very sophisticated biomarker analysis that we are working with. In addition, in lung cancer, as you know, we have a lot of experience now in doing the administration of HER3 DXd in EGFR-mutated patient population as well as now extending into the non-EGFR-mutated patient population. And then there, we are starting to apply the standard IHC assay as well as some more sophisticated assays beyond just the standard immunohistochemistry.

And I think there is -- here again, just like in breast cancer, there's a lot of interesting emerging data so that it is quite conceivable that there could be a biomarker-based clinical development path for HER3 DXd. I think this is the one interesting avenue that we are pursuing, but we have not -- we had really reported it yet publicly.

The next question is from Tony Ren-san from Macquarie.

My first question is probably to Mr. Keller. So this is about Slide 44. The number of patients you guys estimated for DESTINY-Breast11 and DESTINY-Breast05. It appears to have increased slightly compared to the estimates coming out of ESMO 2025 conference. Are you guys still prioritizing DESTINY-Breast11 over DB05? And if so, could you explain to us the considerations? Is it because you hope to release drug exposure and therefore, reduce toxicity, I believe it's 4 cycles versus 14 cycles, right? So much shorter drug exposure? Or is it because of the larger patient population or other considerations?

Thank you very much for that question. After seeing the clinical results for both of these trials, what we're hearing from the oncology community is that ENHERTU in both of these settings is highly, highly attractive. Now as you mentioned, in DESTINY-Breast11, these are for higher-risk patients and there is a larger number of these patients because it's neoadjuvant before surgery. But as you can see on this slide, the magnitude of benefit in terms of those patients who receive a pathway complete response is highest that it's ever been reported.

And so based on that data, and then let's go to DESTINY-Breast05. These are patients who have received neoadjuvant therapy, they've received surgery, and they still have residual disease. This study compares ENHERTU to the established standard of care, Kadcyla. And the magnitude of benefit, again, is really astounding. And so I wouldn't say that we're prioritizing one over the other. As I've been speaking to the oncology community, they see it attractive in both settings. And you're 100% correct, in DESTINY-Breast11, it's only 4 cycles. And so the exposure is very, very limited.

The safety profile is really excellent. And so what we believe is going to happen is physicians will adopt ENHERTU in the neoadjuvant setting, DESTINY-Breast11. And then for those patients that unfortunately, still have residual disease after surgery, it's not going to automatically exclude those same patients from receiving ENHERTU in the DB-05 setting. Now it will get down to risk of patients. But based on the data we've seen so far, Tony, we see this drug being embraced in both settings. And so both are important to us. Does that answer your question?

Yes, that does Mr. Keller. My next and final question is to Kashiwase-san. You mentioned a couple of times in your presentation that it takes over a year to make an antibody drug conjugate drug. Could you explain to us is most of the time taken by making the antibody or the conjugation process or something else?

[Interpreted] Thank you very much for your question. ADC for that monocolonal antibodies production, starting from that conjugation step and filling and also freezing and also as a whole, you need more than 1 year starting from production of monoclonal antibody up into the formulation of it. It takes that much time. As you envision, as for the production of antibody, this is a very long step. But it is not the case that, that is the longest part and is taking almost all the period, but rather as a whole, it takes more than 1 year. Please understand it that way.

Last questions are from Michael Nedelcovych-san from TD Cowen.

I have two. My first is actually a follow-up on incorporation of the NMR biomarker into TL-07 and TL-08. Is the reason for the prolonged discussion with FDA because there's some sort of debate or negotiation ongoing? Or is it simply how long changing a protocol in a meaningful way takes at the agency? That's my first question.

And then my second question regards use of ENHERTU in the frontline HER2-positive metastatic breast cancer setting. Are you aware of any efforts ongoing and maybe it's an investigator-initiated trial to test ENHERTU as an induction therapy in that setting as opposed to treat to progression?

Okay. So let me take the first question then maybe Ken Keller or if you are aware of the medical affairs. Okay. On the NMR question, this is a very complicated question. So it takes time to come up with a specific plan that we are ready to announce publicly. Okay. Are you okay with that answer?

Yes.

Okay. Okay. Okay. Then the other question?

Yes, I'll answer the second question, and then Ken, you can jump in. The concept of induction and maintenance in the first-line HER2-positive metastatic breast cancer setting, that's been around for quite some time. At the recent ESMO meeting, there were -- there was a trial presented looking at testing a new regimen in the maintenance part of that. That study was positive and it has the oncology community interested in really how to optimize both the induction part and the maintenance part.

Now for DESTINY-Breast09, that trial was not induction maintenance, that was treatment to progression. And that's where it delivered the 40 months of progression-free survival. And so, one, we do believe treating to progression with that kind of data is going to be very, very attractive. But to specifically answer your question, yes, there are studies right now looking at optimizing ENHERTU for a certain amount of time and then transitioning to a maintenance-type arm.

There's at least 2 or 3 studies I know of. Those studies will take many, many years to read out. So we really won't have definitive data on what approach is better, treating to progression or doing maintenance reduction for many, many years. My personal opinion is that the DESTINY-Breast09 data is so compelling that most people will treat for a tilt progression as long as patients can tolerate it.

[Interpreted] So with this, we would like to finish the Daiichi Sankyo Science and Technology Day 2025. Thank you so much for your attendance today.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Thank you for waiting. We will now begin Daiichi Sankyo's sustainability meeting. I am [ Konishi ] from the Corporate Communications, serving as today's moderator.

The speakers today are Okuzawa, Representative Director, President and CEO; Ueno, Director and Head of the Japan business unit. Outside Director, Komatsu; and Outside Director Nishii, Chair of the Board of Directors.

Today, using as I've seen, the contents of the value report 2025, which was created with the aim of conveying a value-creation story unique to Daiichi Sankyo, we will explain our sustainability and management strategy, specific initiatives and the challenges we face and our responses. Then we will engage in frank exchanges of opinions with you, and the feedback we receive will be incorporated into the future management and the formulation of the next 5-year business plan.

Today, first, Okuzawa will speak about Daiichi Sankyo's sustainable growth, driven by sustainability management. Next, Ueno will explain Daiichi Sankyo patient centricity activities. Then Director Komatsu and Director Nishii, will provide perspectives on Daiichi Sankyo from the standpoint of outside directors. After that, we will have a Q&A session and time for opinion exchange with all speakers. Please note that today's meeting will be recorded.

Now Okuzawa-san, please.

This is Okuzawa. Thank you very much for taking the time to participate in Daiichi Sankyo's sustainability meeting today. In today's meeting, I will first explain our sustainability management approach and initiatives towards sustainable value creation. I would then like to hear your feedback and expectations, and reflect them in our next 5-year business plan. I look forward to hearing your honest feedback.

First, I'd like to talk about Daiichi Sankyo's sustainability-based value creation. Daiichi Sankyo continues to strive to achieve its purpose of contributing to the enrichment of quality of life around the world by continuously creating innovative pharmaceutical products. Our goal of sustainability management is to contribute to the sustainable society through our business activities.

In our current 5-year business plan, we have promoted sustainability management and strengthened our efforts to address materiality. As a result, the value of our nonfinancial capital, including our human resources, knowledge and technology has steadily strengthened, leading to innovation and competitive advantage. In particular, 3 key elements support our value creation. These are science and technology, human resources and patient centricity.

First, by fully leveraging our strength in science and technology and focusing on the creation of innovative pharmaceutical products, we have produced world-class results, including DXd ADCs such as ENHERTU. The source of our strength in science and technology lies in our individual human resources. We continue to take on challenges on the front lines. People are the driving force behind value creation and our most important capital.

Furthermore, each and every employee shares a common passion based on patient centricity. We work for patients. Our personal purpose, aligned with the company's purpose, which in turn motivates us to take on new challenges. Going forward, we will continue to build and accumulate our unique nonfinancial capital through further strengthening our science and technology and continued investment in human resources as well as through the promotion and implementation of patient centricity.

In the next slide, I will discuss the relationship between our human resources initiatives and strengthening our science and technology. Following me, Ueno will talk about Daiichi Sankyo's patient centricity.

First, I'd like to talk about our human resources initiatives under the current 5-year business plan. During this period, I believe we have significantly strengthened our group-wide human resources, particularly those supporting our strength in science and technology. First, we focused on recruiting external talent, including new hires. Specifically, we strengthened our recruitment of mid-carrier talents, with extensive experience and skills from global leading pharma companies and the new graduates in Japan, such as outstanding PhD holders who will lead future research, and graduates from technical colleges who will ensure a stable supply of ADC products.

Meanwhile, internally, the entire group is providing opportunities for growth and specialized skill development. In Japan, we have increased the mobility of our people to areas of other strengths by providing reskilling opportunities, such as through personnel reassignment and an internal job posting system.

We have provided numerous opportunities for individual growth through our expanding business. These include promoting cutting-edge research through the launch of the research institute and smart research lab, increasing global development in line with the expansion of our ADC and oncology businesses, establishing new biopharmaceutical manufacturing facilities through capital investment and driving company-wide transformation through advanced digital technologies with project 4D. Through these efforts, we expect Daiichi Sankyo's science and technology talent strengthened across the company to become a major force in generating the next wave of innovation.

This hypothetical model illustrates how our human capital initiatives, where investment in people, as outlined in the previous slide, support our strength in science and technology, including ADCs, and lead to long-term innovation as we strive to become a top global oncology company. As introduced in the previous slide, we actively recruit and develop talented personnel from both Japan and overseas in our key areas of research, technology and digital transformation. What enables each employee to maximize their expertise and willingness to take on new challenges is Daiichi Sankyo's unique One DS culture, a culture that values freedom and learning from failure in research and the creation of a rewarding work environment.

Furthermore, in addition to developing and expanding attractive research infrastructure, such as the Shinagawa Research Laboratory, we also provide opportunities for growth and challenge through the establishment of research institutes around the world and the global placement of talent there. These efforts combine external and internal knowledge, generating new ideas and synergies one after another. This continuous investment in people strengthens our science and technology in terms of both human capital and intellectual capital.

We steadily retain outstanding science and technology talent within the company. And as an organization, we expand our external collaborative network and attract highly engaged employees, creating a strong execution-oriented organization. As a result, we have made significant advances in our research, global development and manufacturing capabilities, facilitating the next innovation. These advances include the accumulation of knowledge, technology and discerning expertise as well as improvements to our ability to conduct clinical trials, shortened development times and streamline ADC manufacturing.

In the short term, we expect to see improvement in the success rate of identifying promising lead compounds, the promotion of cutting-edge research and increased productivity through automation of experiments. In the mid- to long term, we will continue to expand our diverse product lineup and the pipeline using new modalities, establishing a system for the continuous creation and stable supply of pharmaceutical products with social impact.

The innovations, excellent pipelines and a challenging talent we have developed in this way will attract new talent and lead to the accumulation of even more advanced knowledge. Indeed, a virtuous cycle and innovation path has been created, in which investment in people generate innovation, which in turn attracts and develops people. This virtuous cycle supports increased social and economic value. While this is nearly a hypothesis at this point, we plan to analyze various information to verify it during our next 5-year business plan.

Finally, I'd like to talk about what I, as our CEO, envision for Daiichi Sankyo. There is a concept called Sanpo Yoshi or 3-way good, good for the seller, good for the buyer and good for society, which means practicing what is good for our customers, ourselves and society. For Daiichi Sankyo, Sanpo Yoshi means growing as a company through a business that contributes to patients, guided by our purpose, and then sharing the results in a balanced manner with our stakeholders, including employees, suppliers, partner companies and even national and local governments and regulatory authorities.

So what is the corporate value we aim for? True value is trust, which cannot be measured by numbers alone. The essence of Daiichi Sankyo's value lies in the trusting relationships we build with our diverse stakeholders. We will continue to embrace new challenges and realize value co-creation with our stakeholders, cherishing this trust and delivering hope to patients to remain a company that makes them feel thankful to have Daiichi Sankyo. We will continue to take on new challenges and realize value co-creation with our stakeholders.

Recognizing the importance of this trust, we are currently formulating our next 5-year business plan. We are engaged in extensive discussions on such topics as what our stakeholders expect from us? What our 2035 vision? And next 5-year business plan, what we value and what we will not? We expect to be able to present our 2035 vision and our goals and strategies through 2030 at the beginning of next fiscal year. Please look forward to it. This concludes my presentation.

Next, we will explain patient centricity, one of the key elements supporting Daiichi Sankyo's value creation using specific examples. I'd like to hand the baton to Director Ueno, who leads this initiative globally.

I am Ueno. Until now, I have been engaged in development and medical affairs work. And since 2024, I have been especially assigned for patient centricity, working on the global promotion of patient centricity. In June of this year, I was appointed a director. And in addition to contributing to the development of the Japan business unit and medical affairs, I will also contribute to the promotion of diversity as a director.

Now I will explain Daiichi Sankyo's patient centricity. This slide shows the overall picture of our patient centricity. The desire to help patients find a hope in treatment is a driving force behind all of our corporate activities. Always sincerely facing patients starting from their voices, we promote value co-creation across the entire value chain, including drug discovery, development, manufacturing and information provision.

In promoting the patient centricity, I myself, a especially assigned officer, have focused on activities over the past 1.5 years. Particularly, I have emphasized direct dialogue with stakeholders inside and outside the company, personally visiting sites, both domestically and internationally. Within the company, through hearings and exchanges of opinions with major organizational unit heads, I have advanced the promotion of understanding of patient centricity and the building of a foundation for its practice. Also by adding patient centricity sessions to various trainings such as DS Academy, I have worked on permeating the culture.

Outside the company, at academic conferences in Japan and abroad, such as ASCO and ESMO, I have insisted on direct dialogue with patient groups, deepening understanding from a global patient perspective and striving to build trust. Also at events such as the UB Pharma Summit and the Academy of Pharmaceutical Science and Technology Japan, I have focused on disseminating Daiichi Sankyo's patient centricity philosophy and activities. These initiatives are an important foundation for both responding to patient needs and achieving sustainable growth as a company.

Next, I will introduce 2 examples of how this philosophy and the foundation building are leading to concrete value creation. One is an initiative in the technology unit. Our formulation researchers actually visited medical institutions, while pharmacists and clinical trial coordinators from the field came to our factories. Through such 2-way site visits and exchanges of opinions, we were able to accurately grasp the needs and issues of the medical field and build mutual understanding and trust. The voices obtained from direct dialog at the site have been utilized to improve packaging specifications of formulations.

The next example is a case where rapid collaboration between Daiichi Sankyo Brazil and America region led to social contribution. There was an urgent request from the Brazilian Ministry of Health to support patients presenting with poisoning symptoms. Daiichi Sankyo Brazil immediately conducted an investigation, and it was confirmed that America region possessed antidotes. The 2 companies quickly build a cooperative system. So [indiscernible] cleaning one by one, the complex regulatory procedures, logistical adjustments and operational issues on site, and completed a transportation process that would normally take several weeks in only 4 business days.

In this case 3 shows the patient centricity as a shared value is the driving force that moves us beyond countries and organizations. In this way, while aiming for concrete value creation, starting from the voices of patients and the medical field, we will continue to promote Daiichi Sankyo style patient centricity.

Finally, I'd also like to touch on future prospects. Since our founding, the feeling of thinking of patients that has taken root in each employee, including management, is the source of our innovation. By shaping that feeling through employee actions and management support, expanding patient contacts across regions and functions and organically collaborating within the company, we will reflect patients' voices across the entire value chain. That is that Daiichi Sankyo's patient centricity. Going forward, we will continue to work as one company starting from patients' voices toward value creation. Thank you for your attention.

Next, we will have an explanation from Outside Director Komatsu.

Before I give the floor to Director Komatsu, I'd like to give a brief biography. He was appointed as an outside director of our company in June 2022. He was appointed Chief of Nephrology at St. Lukes International Hospital in 1998 and Director of Kidney Center at St. Lukes International Hospital in 2007. He was then appointed Vice President and Chief Quality and Safety Officer at St. Lukes International Hospital in 2011.

In 2017, he was appointed Professor of the Department of Healthcare Quality and Safety at Gunma University Graduate School of Medicine and the Director of the Healthcare Quality and Safety Department Gunma University Hospital. He then served as specialty appointed Vice President of Gunma University Hospital. And in 2023, he was appointed Professor Emeritus and especially appointed Professor at Gunma University, Advisory Board member at Gunma University Hospital and Vice President of Itabashi Chuo Medical Center.

He graduated from the University of North Carolina at Chapel Hill School of Public Health in 2010. He is a leading expert in chronic kidney disease treatment, practicing team medicine and the patient participatory medicine as well as an expert in medical public health and medical quality and safety management.

Thank you for your kind introduction. I am Komatsu. Today, from the perspective of an outside director and a health care professional, I'd like to discuss Daiichi Sankyo's science and technology, patient centricity and future expectations.

First, I'd like to talk about science and technology. Daiichi Sankyo was established through the merger of the former Daiichi Pharmaceutical and the former Sankyo, combining their respective histories and growing into a culture built on this foundation. With its outstanding R&D know-how and technological capabilities, it has realized many innovations, including ADCs.

Our science and technology, which enables us to deliver innovative medicines that transforms the standard of care to health care professionals has been highly recognized worldwide, including receiving the Prix Galien award. Leveraging this strength in science and technology, I hope to see the company expand beyond the ADC field and fully demonstrate its global competitiveness as one of Japan's leading drug discovery companies by exploring new fields.

To that end, I will continue to offer advice from my professional perspective as a health care professional. As a medical and public health expert, I'm particularly interested in Daiichi Sankyo's patient-centric approach. Patient centricity not only contributes to patient treatment and satisfaction, but it's also positioned as an important concept supporting the development of comprehensive health care, including research and development, diagnosis, prevention and monitoring. In recent years, its social and economic impact has attracted attention. And the patient-centric approaches have been recognized by international organizations such as the WHO and the OECD as well as from the perspective of ESG investment as a factor in increasing corporate value.

In drug development, development of clinical trial protocols that reflect patient feedback leads to increased consent acquisition rates and continuity of clinical trial participation. As a result, development time is shortened, costs are reduced and data quality is improved. We view these efforts as an important strategy for enhancing our company's mid- to long-term competitiveness, directly linked to maintaining and strengthening product value and gaining market trust.

In addition, in the field, it is essential to provide easy-to-understand explanatory materials that allow patients to correctly understand the medical treatment and the medications they receive. I believe that patient-friendly materials can lead to early detection and early treatment of potential adverse events, improving treatment continuation rates, quality of life and even prognosis.

The idea that patients are no longer passive recipients of medical care as they have been in the past, but rather partners in the creation of health care, in other words, co-creation, is the essence of patient centricity. This approach is crucial for realizing our purpose-driven management, and we strongly believe it is one of the key elements supporting the achievement of our social mission and sustainable growth, not only for patients themselves, but also for health care providers and our company.

This slide presents specific examples of patient-centricity activities at pharmaceutical companies. I will omit the details, but there are many ways in which pharmaceutical companies can utilize a patient-centric perspective within the value chain.

The next page, we'll introduce how we are actually utilizing this approach at our company. Daiichi Sankyo has positioned patient centricity as the core of our corporate activities. And as Director Ueno mentioned, has promoted it throughout the value chain. To understand the voices and the needs of patients and work together with them, we collaborate with more than 900 patients advocacy organizations worldwide annually. We also engaged in a variety of activities, such as the PFDD or patient-focused drug development initiative, which incorporates patient feedback into drug development and improved clinical trial information documents and schedules.

We are promoting the importance of patient centricity throughout the company through various internal events and training sessions. Director Ueno is also actively promoting it externally, including a speech at the ASCO advocacy summit. I myself have spoken at the DS Academy, which develops the next generation of global leaders and at the global event for World Patient Safety Day, sharing my knowledge of patient centricity with employees from the perspective of both an outside director and a health care professional.

At the DS Academy, I was particularly impressed by the way employees from diverse backgrounds share ideas on the theme of patient centricity and engaged in earnest discussions across borders as one global team. Patient centricity is an important company-wide concept that is needed at every position in the value chain, and I believe this was a truly symbolic event that employed that idea. I'm very excited that the next generation of global leaders, such as those participating in the DS Academy, will drive our future growth with a patient-centric mindset. I personally intend to continue to allocate the importance of patient centricity, which I believe will contribute to our company's development and the realization of our purpose.

Finally, I have 2 expectations for Daiichi Sankyo going forward. The first is to further advance our purpose of contributing to the enrichment of quality of life around the world by delivering our excellent pharmaceutical products globally. To achieve this, I believe each employee needs both a competitive mindset in the global market and the confidence in their ability to produce excellent pharmaceutical products at the global level.

The second is to bring global research, technology and other knowledge back to our company and apply it. We currently have a system in place that allows us to apply the latest medical technologies from overseas, centered around our research institutes in Boston and Munich, and our Smart Research Lab in San Diego. I hope the company will make the most of these capabilities and contribute to the further development of the pharmaceutical industry and the health care as a whole.

The patient centricity we discussed today is a common language that transcends global boundaries. I believe that if each and every employee adopts a patient-centric mindset, we can overcome global carriers. I have high hopes that the company will contribute to the 2-way development of health care from Japan to the global stage and from the global stage to Japan.

Next, we will have an explanation from Outside Director Nishii. Before the explanation, let me introduce Nishii's career history.

Director Nishii was appointed outside director of our company in June 2023. He joined Ajinomoto Company Incorporated in 1982 and served as Director and Senior Managing Executive Officer of Ajinomoto Frozen Foods Company, Inc. In 2011, he was appointed Executive Officer of Ajinomoto. After that, he served as Director and Senior Management Executive Officer, President of Ajinomoto Brazil. And in 2015, became President and CEO of Ajinomoto. In 2021, he became Director, Representative Executive Officer, President and CEO of Ajinomoto. Currently, as an important concurrent position, he serves as Outside Director of Kao Corporation.

Now Nishii-san, please.

Thank you for the introduction. I am Nishii. Since June of this year, I have been serving as Chair President of the Board. It's been 1 year since I last attended the forum, and I look forward to today. What I will talk about today is, first, the new structure of the Board of Directors, including CEO, Okuzawa, and then about monitoring of management. After that, I will give my views on Daiichi Sankyo's sustainability management from the standpoint of an outside director.

First, here is the composition of directors from June 2025 onward. Under the strong leadership of CEO Okuzawa, with the addition of 2 new internal directors and 2 new outside directors, we believe we have formed a Board of Directors that is more diverse, highly specialized and independent than ever before. This new fracture has 2 major features to enhance the effectiveness of the Board of Directors.

First, regarding internal directors, Mr. Keller, an American who leads our global oncology business. And Ms. Ueno, especially assigned officer for patient centricity and our first female director from within the company have been appointed. This has made clearer Daiichi Sankyo's identity of aiming to be world-class in the oncology field with strength in science and technology.

As for Outside Directors, Mr. Watanabe, Founder and Manager of an M&A advisory firm, and Ms. Kinoshta, Founder and Manager of an investment fund management company have been appointed. We believe this has created a structure that better responds to the trust placed in us by shareholders and investors. While aiming to be world-class in oncology, we also respond to shareholders' trust. At times, we incorporate both perspectives to enhance corporate value. We have strongly emphasized this point in structuring the Board of Directors to enhance its effectiveness.

Under CEO Okuzawa's leadership, both the Board of Directors and the Nomination and Compensation Committees are strengthening corporate governance. Especially in the Board of Directors, many discussions are held toward realizing the value creation story and have introduced the main topics of discussion in 2025. First, reports and discussions on medium- to long-term strategy, particularly the next [ sixth ] 5-year business plan. Also from the sustainability perspective, discussions on integrating sustainability into the sixth 5-year business plan, strongly conscious of double materiality, including impact path from nonfinancial to financial.

In addition, many initiatives are being taken to enhance the monitoring function of both internal and outside directors in the highly specialized pharmaceutical field. For example, outside directors observed participation in the executive management committee, EMC, and there are many opportunities for information provision and opinion exchange with outside directors regarding the strategic business alliances with AstraZeneca and Merck, lawsuits with former Ranbaxy shareholders, CMO management and response to U.S. tariffs and most favored nation policies.

Also reports are made to the Nomination Committee on global management structure and the selection of organizational heads, leading to deliberations in the Board of Directors. In this way, transparency of information is maintained at a high level and trust is preserved between the executive side and outside directors. Also, as governance regarding the CEO system, the Nomination Committee deliberates on the appointment, dismissal, and reappointment of the CEO and reports to the Board of Directors. This is one of our company's unique features.

But in September this year, a joint meeting of the Nomination and Compensation Committee was held, and the CEO gave an interim report on the 2025 CEO goals, sharing progress and issues. In March 2026, at this joint meeting the CEO will give an annual report on the CEO goals, and the Compensation Committee will evaluate the CEO's performance. I hear that there are still a few companies that conduct CEO evaluation and the deliberation on appointment, dismissal and reappointment by the Nomination and Compensation Committees. Other company conducts this every year in both committees, and I wanted to share this, that this is a note-worthy point.

In addition, toward the sixth 5-year business plan starting in fiscal 2026, discussions are progressing in each committee on the director structure, the executive compensation levels and the nature of long-term incentives. Through these initiatives, the Board of Directors and both committees are jointly monitoring whether the CEO system is being operated appropriately.

This slide shows 8 elements that I consider important as indicators for monitoring the management as an outside director participating in Daiichi Sankyo's Board of Directors. Because managing a pharmaceutical company requires high expertise, I believe the points to be monitored by the Board of Directors must be made clear. In particular, from the perspective of growth investment and asset management, whether balanced portfolio management is being achieved is something I want to explain more clearly to shareholders and investors. Our company is currently formulating the next 5-year business plan scheduled to be announced around next spring. In it, we expected to share with shareholders, stakeholders, the cash balance of income, strategic investment and the shareholder returns 5 and 10 years ahead.

Next, I will talk about the evaluation of Daiichi Sankyo's sustainability management from the standpoint of an outside director and expectations for the future. So far, our sustainability initiatives have been structured systematically within the company in accordance with ESRS, the European Sustainability Reporting Standards, including content goals and processes. The level of disclosure of sustainability-related information is high, and we are evaluated as a company with strong risk resilience.

Currently, discussions are underway to integrate sustainability initiatives into the sixth 5-year business plan based on double materiality adjustment. Our company is trying to draw a corporate value enhancement story of growing as a global company in the highly competitive oncology field with patient centricity at the center of corporate culture. Nonfinancial capital such as science and technology, human resources and corporate culture and investments, including DX, to strengthen them are sources renovation. These lead to social value acquisition few contributions to patients and transform society and ultimately to financial value. This is the innovation path we are trying to draw. Currently, discussions are progressing to visualize the connectivity between nonfinancial capital and finance and innovation creation. I expect these discussions to deepen further in the sixth 5-year business plan.

As far as room for growth, there are several things I expect from Daiichi Sankyo. First, improvement of employee engagement as an important KPI of that raw materiality. Our company leverages strengths in science and technology, challenging unique and very difficult manufacturing. Supporting this is the energy and high engagement of employees. Enhancing this is very important for creating next innovation. Employee engagement will be monitored as an important KPI, and I hope it will be more actively communicated to society.

Also, our company aims to foster culture, where diverse employees can continue to work productively and vibrantly under the unique group corporate culture called One DS culture. I have great respect for -- and highly valued initiatives to foster this One DS culture. But I think it will be good if the group communicated more about how overseas members are working on it and about the state of engagement.

Next, patient centricity initiatives, including not only patients, but also their families and partners. As directors Ueno and Komatsu mentioned, patient centricity initiatives not only benefit patients themselves, but also bring positive effects to our company. Especially in oncology, it will increasingly be required to contribute to society by considering not only patients themselves, but also their families and health care professionals.

Finally, I hope the company will more actively communicate to society that sensibility initiatives are being promoted together with multi stakeholders across the entire value chain, including health care professionals and partner companies, not just internal stakeholders.

And now we'd like to start Q&A and opinion exchanges. [Operator Instructions]

I am Hashiguchi from Daiwa Securities. I would like to ask the same question to Mr. Okuzawa and Mr. Nishii. Currently, what you are focusing on in discussions are the sixth 5-year business plan and the 2035 vision, as you mentioned. Could you share more about the background and issues behind setting 2035 as the vision standard?

When the 2030 vision was set in 2021, it was right after the launch of ENHERTU. It was a time of climbing the mountain, expanding the DXd ADC franchise. This next 5-year business plan period seems to be an extension of that. But 2035 might be the peak of the mountain. And depending on the future initiatives, whether you can climb further or face a cliff, will change. In that sense, is it okay to set the peak as a vision and say you don't know beyond that? What you will do until 2030 and what you will do with your view towards 2035 may not differ much. So regarding the need to look beyond the end of [ ENHERTU's ] life cycle, that current awareness of issues, and what must be done in the next 5 years. Why was 2035 set as a vision standard? I would like to hear from Mr. Okuzawa's standpoint and also from Mr. Nishii's standpoint. What is your view on this, please?

Let me answer first. I am Okuzawa. I feel your question already contains the answer. Probably everyone is wondering what will happen between 2030 and 2035 And we also imagine that people are naturally conscious of ENHERTU's LOE. So just saying until 2030 is not enough, extending to 2035 allows us to talk about what measures we are taking for what will happen in that period. That was a strong motivation.

When making a 5-year business plan, we usually look about 10 years ahead, that often coincides with the flagship product reaching LOE, and we consider how to overcome that. So it has been a suitable time frame. This time, we are particularly discussing measures after ENHERTU.

May I? I am not an expert in pharmaceutical, especially drug discovery, so my answer may be rough on those milestones. But I think Daiichi Sankyo, having obtained ENHERTU, is rapidly combining in oncology with alliances with AZ and Merck.

In Board discussions, personally, I hope the company will also do things on its own. Currently, development milestones are achieved within alliances. But for the next growth, I think there is a potential to do it independently. I hope this will be incorporated into the vision, and that in the sixth 5-year business plan, investments and preparations for the future will be included. There are many things to do. Their results will be pursued by 2035, having fruits harvested in 2035. At this stage, I expect the context of being a global top-class oncology company will become sharper. That is my expectation. Thank you very much.

I am Koguchi, Sumitomo Mitsui Trust Bank. First, I'd like to ask a question to Ms. Ueno regarding the patient centricity. If you ask other pharmaceutical companies, they say similar things, patients first and so on. For pharma, it is obvious, employees may superficially understand, and I think we get it. But for each person, to truly think deeply and reach deep understanding is not easy. How do you make efforts to deepen it 1 or 2 steps further?

Also, domestically and overseas, the thinking may differ. To connect to One DS culture, how do you unify globally? For example, in the U.S. where contribution to revenue is high, or in Europe where sustainability awareness is high, and in Japan, how do you unify and approach this? Could you explain more, including how it connects to corporate value enhancement?

Thank you for your question. Regarding the patient centricity and how each employee can truly take it personally, I think that is a question. Our company's patient centricity has both top-down communication and bottom-up culture. Employees already have a culture of wanting to value patients and thinking carefully about what they can do for patients. Having both bottom up and top down is our strength.

Although this [ soul ] already exists, we want to further promote and deepen it. Specifically, as I mentioned today, we add patient centricity sessions to various trainings in each function and region. I myself have visited many functions and regions, communicating the concept of patient centricity, encouraging each area to raise its patient centricity mindset and to incorporate it into their actual work, leading to concrete contributions.

Currently, in the Japan business unit, I am in charge of, for example, in sales sections and medical affairs, employees voluntarily hold workshops, thinking about patient centricity in their open context, discussing this is my patient centricity, what do you think, how about this activity. This is not just formality, but employees truly committing, advancing the patient centricity mindset and incorporating it into their work.

Another point regarding how to advance this globally, as you said, patients' perspectives differ by region due to cultural differences. Each department also has different ways of contributing and perceiving patients. So a short phrase may not fit perfectly. Currently, I convey patient centricity, as always, placing patients at the center of our hearts and acting accordingly.

In Europe and the U.S., patients voices are incorporated in the regulatory framework, into reimbursement and approval processes. So activities are somewhat ahead compared to Japan. That should be advanced further. In Japan and ASCA, patient collaboration has not progressed much in that regard, so we will advance it. Globally, we are starting initiatives such as patient forums, mainly in medical affairs, to promote collaboration and partnership with patients under the same concept. Does that answer your question?

I understand. Especially regarding overseas, if you could disclose more specific examples in the future, it would help our understanding, please.

My second point, regarding the Board of Directors, your company has, for the first time, appointed an internal female director, Ms. Ueno, and also a foreign national Director as well as several new outside directors. It seems that transformation is progressing considerably. So I'd like to ask the Chair, how has it changed, and what further changes do you expect?

And another point, this is for either Mr. Okuzawa or Ms. Ueno. It is very pleasing that Ms. Ueno has become a director. But I am a little concerned about whether the next female leaders are being properly developed in the areas we are familiar with. For example, the head of sustainability has been female for 2 consecutive generations. But how is it across the whole company? If Mr. Okuzawa could explain this, it would be helpful.

Thank you. As I mentioned earlier, continue to grow with oncology as a core and with patient centricity as a nucleus. The new internal directors symbolize this. Especially the oncology business is, needless to say, a global business. Within pharmaceuticals, it is recognized as the field with the greatest growth expectations and the fiercest competition.

Having Ken Keller directly join the Board of Directors is very significant. Since June, his global leadership has already been strongly demonstrated, particularly in matters such as U.S. tariffs, IMF issues and in driving growth in various next steps. This leadership is being exercised directly under the Board of Directors, and we can evaluate and have discussions within the context. This is very significant. Furthermore, as I answered to Mr. Hashiguchi earlier, I hope this will continue to be fully exercised.

As for the 2 new outside directors who joined, their careers were introduced earlier. In the sixth 5-year business plan, Daiichi Sankyo must further strengthen perspectives, especially including the business alliances. We have engaged in alliances so far. But to further raise corporate value, activities to further enhance terminal value are essential. At the same time, we must not neglect performance and numerical targets within the 5-year business plan. The 2 new directors each have distinctive career backgrounds, and I feel discussions are deepening considerably in these respects. That's all.

Regarding the female leaders, fortunately, our female leader pipeline has become substantial as in our research labs. As you know, we have one female director and one full-time auditor and 3 executive officers. In Japan, about 120 people serve as people managers. These managers have long maintained voluntary information exchange and awareness mechanism called the [ SWAN ] association. Ms. Ueno has long served as its leader. Now those 120 people who have grown under it are in a situation of the following after Ueno.

Furthermore, in DS academy, among the first class of 30 participants, about 1/3 are women. This includes both Japanese and overseas members. Regardless of nationality, these 30 people are potential future EMC members. Some are already EMC members or directors. So in practical and concrete terms, the female leader pipeline is substantial. I report this today. Thank you.

I am [ Natsunami ] from [indiscernible] Asset. I would like to ask about Mr. Okuzawa's explanation. Thank you for presenting the metrics of innovation creation and value enhancement for investment in people. It was very easy to understand. I expect that in the future, you will show concretely with KPIs, how human capital leads to corporate value enhancement. In that regard, how far have you progressed so far?

Looking at the integrated report, in the engagement survey, expectations for growth have improved greatly, while corporate culture has slightly declined. Perhaps you have provided many opportunities so far. But going forward, in fostering a culture that generates innovation is some additional mechanism or guideline needed. What do you see as current organizational issues in building an organization that generates innovation? In the next 5-year business plan, how do you intend to foster culture and make the organization one that continuously generates innovation? Could you give us some hints?

In the 5 years of the current business plan, we have overwhelmingly allocated cash flow to R&D investment and CapEx as priorities 1 and 2. We discussed comprehensively strengthening S&T. In work places that generate S&T, employees have growth opportunities right before them. I believe employees have been able to utilize these opportunities to contribute to the company, benefit the patients and raise their own value over these 5 years. As a result, more people worldwide want to join that Daiichi Sankyo. I think this has been one of the achievements of these 5 years. This is directly connected to innovation creation. Looking back now, I think it is not an exaggeration.

As for future issues, in each unit of value chain and organization, research institutes, global clinical development, manufacturing departments in technology, formulation research departments, innovation creation and talent development are progressing. Going forward, we must strengthen collaboration among them. Looking at Daiichi Sankyo's overall direction as a team, in our core behaviors, we emphasize, collaborate and trust. We want to shift our activities toward this keyword so that through collaboration we can generate even greater innovation.

For example, just last week, in the Japan business unit led by Ueno, there was some [ MA ] forum. In this MA forum, domestic sales and marketing, safety information management and medical affairs, 3 functions all gathered. They set IoT management as a common theme and discussed from each standpoint, how to strengthen it further. IoT management is a theme that Daiichi Sankyo, working with DXd ADC must focus on most. In this cross-functional workshop, participants passionately discussed what could be done from each standpoint. I listened from the beginning and felt very encouraged about the future of this collaboration. Doing this at a global level is my current challenge and direction.

So the measure of whether this is being achieved will be the engagement score, correct?

Yes. For all 3 core behaviors, the engagement survey has questions linked to each item. By looking closely, we can analyze.

I am Yamaguchi from Citigroup. First, I'd like to ask Outside Director Komatsu a question. I believe that developing clinical trial plans that reflect patient feedback is directly linked to the competitiveness of products. Regardless of whether you can provide specific examples, I'd like to know whether this actually speeds up or slows down the process? Also, digital technology has been making inroads in this area recently. Could you tell us more specifically about your company's efforts in this area, if there are any? That's my first question.

As you pointed out, patient centricity doesn't just mean working for the patient, but also from the patient to us or co-creation with the patient. And I think the most typical example of this is in relation to clinical trials. At our company, we have established a specialized dedicated team in our development department that reflects this patient-centric, patient perspective in drug development. This team enables appropriate communication with patients and on-site clinical trial coordinators. And as a specific example, we use this information in the review of clinical trial protocols and informed consent documents.

As for actual effectiveness of this approach, and this is an overseas example, but in the entire process of clinical trials and drug development, patient recruitment and registration are set to be the biggest bottleneck. And research designs that incorporate the patient's perspective have been used in overseas examples. And there have been reports that study, plan, and that reflect patients' voices, easy to understand the explanatory documents and can increase the clinical trial enrollment rate and reduce delays.

What about digital transformation? Are you using digital technology?

Regarding digital, for example, when it comes to informed consent documents, rather than just having a doctor or a clinical trial coordinator explain the details, I think there are ways to use digital, such as creating easy-to-understand materials. How exactly are we using them? May I ask Ueno-san.

Yes, may I explain a bit more. As Dr. Komatsu just mentioned, there are, of course, efforts to use digital instead of paper informed consent documents. For example, for patients, -- and I think this is something that's progressing, not just at our company but across the industry. We can use patient-reported outcome where patients record their symptoms and other information, and we receive that data electronically. And it's also timely as the patient recalls those symptoms on the spot and it's time stamped so we know when and where they were made. And that data can then be sent to the medical institution beforehand. And by sending it, I mean an integrated record, which allows medical institutions staff to reach out to the patient earlier and detect side effects early. This is one example of how patient reported outcome can be used.

May I ask one more question? Next, I'd like to ask Ueno-san. Speaking of patient centricity, your company is currently working on anticancer drugs in particular, and I understand that you've made a lot of changes in dosage forms, from IV to SC and in some cases, oral. I imagine that patient responses will change depending on the timing of administration and whether the drug works well with other medication. Is this approach also based on that?

For example, the development of new dosage forms, dosage or treatment sequences? Is that what you're asking? Of course, we develop drugs with the belief that they will contribute to patient outcomes and their lives.

Well, of course, I believe so. But I was wondering if there's any part of it that stems from that kind of thinking. I wanted to know whether your company has an aspect of doing something because SC is more popular or because it will extend the patent, but rather because it's good for patients.

Yes, that's exactly what we do.

My name is [ Kodaira ] from BlackRock. I have a question for CEO, Okuzawa-san. I'd like to ask about double materiality which Director Nishii mentioned earlier. When communicating with your employees, what is the difference between single materiality and double materiality? What is the significance of your company's double materiality? And also, how do you create social value without sacrificing economic value? What kind of efforts do you make in communicating with employees about these questions? And also, what kind of response have you received from employees?

I myself spoke about the concept of Sanpo Yoshi today. And as a manager of the company, I communicate this basic management philosophy whenever I have the opportunity to do so. And this is not something I am doing alone. Every year, EMC or the senior management team takes the results of an employee survey and sets out areas of challenge and concerns. And from April onwards, we begin implementing initiatives that identify this year's theme. And as you can see, management places great importance on things that have a direct impact on employees, such as the motivation and mindset of each employee, and these are the pillars of our activities in various places.

And this is what we have established during this current 5-year business plan. And I think One DS culture has really taken root over the past 5 years. We now have bases in 32 countries, and I feel like it has really taken hold. I'm currently traveling to various places to visit all of them. And I think I will be able to visit all of them by the end of this fiscal year.

And whenever I visit different places, I always ask employees, why did you join Daiichi Sankyo? One thing I expect is that they'll say how great Daiichi Sankyo's science is and how great the products in its pipeline are. But it's not just that. There are always employees who say things like, because I like Daiichi Sankyo's culture. The management and everyone else certainly talk about things like One DS culture and core behaviors. But when I ask them, what it is they really like about the company, and they say exactly that. Compared to the workplaces they have worked at in the past, where most of the people who come to our overseas spaces are from western megapharma, and they say, Daiichi Sankyo overwhelmingly talks about something like that every day.

Of course, there are products and marketing strategies, budgets, market share, the pipelines and et cetera, that we also talk about. These are things that people talk about on a daily basis in a normal company, I guess. But you hear them, from management, but it's not just that. They also need to understand what we value in a way that reaches employees' hearts. For example, words like people, respect, trust and the culture are commonly used on a daily basis at our company, which makes it completely different from any other company they have worked for before.

I am very happy to hear, I like a Daiichi Sankyo's culture, in that sense. And I feel that even without using the term double materiality, this has essentially taken route. And this may be a bit biased, but that's the feeling I get.

I am Sogi from Sanford C. Bernstein. This is for Mr. Okuzawa. As your company grows rapidly as a global corporation, I believe it is extremely important to globalize your human resources. From what I've heard so far, you have bases in 32 countries. So I think you are making great strides in globalizing your workforce.

Looking at your presentation so far, I've noticed that you are rapidly recruiting global talent from other companies, especially in the development and commercial fields. But what about globalizing your research talent is particularly important as it's the source of innovation. To what extent has globalization of your research talent progressed, particularly in drug discovery? And in what direction do you see it moving forward?

Also, regarding globalizing your workforce, currently, most of your management, both internally and externally, is Japanese. With only Ken Keller as your sole non-Japanese. Do you have any plans to change this current structure in order to continue competing as a global company?

And finally, as you increase your global talent pool, you're a Japanese company, and looking at other companies, I imagine global operations present significant challenges. How have you overcome these challenges so far? Compared to what are often considered fully global companies, to what extent have you globalized your internal operations? Of course, I understand that this is the case since clinical trials are conducted globally, but please tell us what level the actual employees have reached in terms of working seamlessly globally?

Thank you for your question. Regarding the first point about global talent, you asked about research. There is no question that our Shinagawa R&D center is currently the largest base for discovery research. And we are looking forward to the completion of our new research building currently under construction. In 2 years, it will be completed. With these investments, I believe that Shinagawa in Tokyo will continue to be the base for discovery research with many Japanese scientists active there.

At the same time, we are currently working with research institutes in Germany and the United States, which are part of a scientific ecosystem comprised of local academic institutions, start-up companies and various research institutes. Our researchers in Shinagawa and [ Kasai ] are exploring the of research collaboration there. In other words, rather than simply leaving it to business development and expecting them to fetch something, our researchers and scientists are actively seeking out things that will strengthen our discovery research strategy. We are currently developing such bases in the United States and Germany.

In the midst of all this, we are actually launching another smart lab in San Diego. It currently has about 40 employees, I think. And most of these people from the United States. And the head of the lab came to Shinagawa just this week to give a presentation on the progress of lab smartification. It's a very ambitious and exciting new lab that combines AI and robotics, resulting in highly efficient solutions. And 2 years from now, the know-how and the systems developed there will be transferred to a new research building in Shinagawa. And this is also something we are currently working on. And once this system is complete, we'll be able to conduct discovery research from both Shinagawa and San Diego on the same platform. I feel like that day is fast approaching.

And secondly, what is the management structure, you asked? We've added Ken Keller to our internal Board, which has greatly diversified our discussions and provided a great deal of inspiration. And our executive management committee, which serves as a talent pool similar to that of an internal Board of Directors, is comprised of approximately 20 senior management members, including several foreign leaders. Furthermore, we have DS Academy members waiting to be appointed. Our pipeline of non-Japanese leaders is steadily growing that way, and we believe we can further increase diversity in terms of nationality at the director level.

And now regarding the challenge of global operations, this is truly an ongoing challenge. With Japan, the United States and Europe as well as Asian countries such as China, and Latin America, Brazil, Mexico and Colombia, we have a significant diversity of countries that we need to cover. Within this framework, we are running a global team through each value chain function, and we are currently making step-by-step improvements through trial and error.

Our observation is that our global operations have undoubtedly evolved since we were able to work remotely. However, as we have continued to do this, we've also come to realize that it's also important to properly incorporate face-to-face opportunities to further strengthen our global remote work model. Right now, we do this somewhere, not just Tokyo, but Munich or New Jersey and et cetera, and meet face-to-face several times a year to work together, including for team building. Then we split off and continue working remotely from our respective locations.

We've also been able to establish a global HR system common to the group. So employees can seamlessly integrate global employment arrangements, no matter which country they join. For example, in Switzerland, we've established a system where a global QA leadership can be exercised as a Daiichi Sankyo Swiss employee, and we've made significant progress in improving our operations over the past 5 years. And we'd like to further evolve this.

Can you hear me?

Yes.

This is [ Sawada ] from JPMorgan Asset Management. I have 2 questions, mainly for Okuzawa-san. One is something that was mentioned briefly in this year's integrated report. I believe you disclosed occupational health and safety indicators in the context of creating a safe and secure workplace environment. Looking at the past 3 years, it doesn't seem like there's been much improvement in this area.

And last year, there was that incident involving [ Agatsuma-san ]. And I think that with your company's rapid expansion of business, various stress levels are constantly rising for executives and those in similar positions. How do you overcome this and what kind of health management will the company implement to address this issue? Of course, patient centricity is a very important concept, but I think employee centricity is even more important. So could you please answer this question first?

Thank you, [ Sawada-san ], for that question. We appreciate your concern for our own health. You are absolutely right. I believe all employees are under a great deal of stress, in a positive sense, I believe. However, even so, all employees and management have truly ambitious goals, and we have 20,000 people working every day. And the company's management is urging employees not to forget about health management, and the HR department is also making every effort to communicate the importance of health management.

And as I mentioned earlier, about global work styles and global operations, each value chain, corporate function, that is, and team is also developing its own rules and practices to achieve work-life balance. And similar efforts are being made at the corporate level in each country. And in that sense, I believe remote work can be effectively used to reduce the physical and mental burden. However, of course, I cannot leave it up to each employee. If I myself, I'm not healthy, it will be the greatest risk to our company. Therefore, I will keep this in mind and continue to work hard to maintain my physical and mental health.

If possible, I think it will be necessary for the Board of Directors to have some kind of system in place to constantly monitor Okuzawa-san and internal directors and senior managements' health. I hope you will continue to discuss this issue.

And just one more point. As I mentioned earlier, regarding the engagement survey, at this meeting last year, you disclosed that there was a gap between benchmarks and learning from the failures from some collaborations. And while there has been some improvement in this area, this time around, the overall figures have still dropped. So I'd like to hear your thoughts on this.

Thank you for that question. I believe we have been working on learning from failure for several years by now. But as you pointed out, when we look at these figures, it's true that we feel a little short of our expectations.

For example, when it comes to learning from failure, we could use the development of edoxaban as an example. We actually interviewed many employees involved in this project of edoxaban, some of whom may have been former employees, and asked then what we should have done and where we have made mistakes. So this year, we have been working on a series of initiatives to learn from our own product development. This is something I'm very ambitious about. And because it's our own case, I think it's helped communicate to various employees that we are serious about learning from our failure and that we may have had opportunities to make something like edoxaban even bigger.

Furthermore, in terms of our research culture, we've adopted the term learning from success and failure. Adding it to the 3 words that represent our company's positive research culture, along with scientific freedom and craft [ personship ]. By including success and failure, we hope to encourage individual researchers and scientists to adapt these terms without feeling pressured. This is something we are working on. And I believe it's something we need to continue doing in the future on an ongoing basis. I hope to firmly establish learning from failure and learning from success as a core part of Daiichi Sankyo's positive culture.

Now we have reached the scheduled end time. So we will now conclude the Daiichi-Sankyo Sustainability Meeting. Thank you, everyone, for joining us today.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Ladies and gentlemen, we would like to start FY 2025 Q2 financial results presentation. My name is Asakura, in charge of Corporate Communication.

In this presentation session, we are going to use both Japanese and English. Operator Instructions]. Our corporate website, IR Library earnings call related material page carries the presentation material, both in Japanese and English.

And let me introduce today's speakers. We have representative Director and CEO, Okuzawa, we have the Head of Global R&D, Takeshita. We have Ken Keller, who is the Director and Oncology Business Head. We have CFO, Ogawa.

First, Okuzawa and Takeshita will offer you the explanation of the highlights of the second quarter results. And we are going to receive questions from investors and analysts by 5 p.m. Media people can start asking questions separately from 10 minutes past 5 p.m.

Today's session is going to be audio recorded. I would like to ask for your understanding in advance. Please, Mr. Okuzawa.

Good afternoon to you. This is Okuzawa speaking. Thank you very much for your joining this financial results representation of Daiichi Sankyo. And now I would like to explain to you based on the material of the unconsolidated financial results of the second quarter of FY '25, which was announced externally on 1 p.m. Japan Standard Time today.

This is Slide 3. I would like to first cover the fiscal year '25 second quarter financial results and fiscal year '25 forecast business update and then R&D update in this order I'd like to present. And as to the R&D update, I would like to ask Dr. Takeshita the global R&D head to explained, and we will be entertaining your questions at the end.

Please now look at Slide 4. This slide shows the outline of the FY '25 second quarter financial results. the revenue was JPY 975.4 billion, increased by JPY 92.6 billion or 10.5% year-on-year. Cost of sales increased by JPY 25.8 billion. And SG&A expenses increased by JPY 51.3 billion. increase in R&D expenses, the JPY 23.5 billion increase year-on-year. As a result, core operating profit was JPY 158.6 billion, declined by JPY 8 billion or 4.8% year-on-year.

Operating profit, including the onetime profit and loss was JPY 144.2 billion, declined by JPY 42.7 billion or 22.8% year-on-year. And the profit attributable to the owner of the company was JPY 130.8 billion, declined by JPY 15.9 billion or 10.8% year-on-year as to the result of the exchange rate. $1 is JPY [ 146.04 ] and this is [ 6.5% ] appreciation year-on-year and EUR 1 was JPY 168.6 and the yen depreciation by JPY 2.13 year-on-year.

And this is Slide 5. Now I'd like to talk about the factors contributing to the increase or decrease year-on-year. revenue increased by JPY 92.6 billion year-on-year. And now I'd like to show you the breakdown by the business unit.

Let me begin by Japan business unit and others. The Belsomra for insomnia and that way, which is the antitumor drug, and Lixiana direct oral anticoagulant and [ Talisia Corpin and no ] antitumor effects increased their sales. And that is absorbed realized the sales for unrealized gains for Daiichi Sankyo Espha, that was JPY 11.2 billion. and also the decline by the vaccine business shrinkage that was JPY 6.1 billion. We had overall increase by JPY 1.6 billion totally.

And now let me talk about the overseas business units. And here, we have excluded the impact by the foreign exchange. Oncology business increased by JPY 69.7 billion due to the growth of the [ NCAR2 ] and also the contribution of the sales by data way.

And American region experienced a decline by the sales by for the decline of the injectable and a for iron deficiency and anemia. And EU specialty business increased by JPY 16.9 billion due to the growth of the Melemed and Stendi, which are hypercholesterolemia treatment increased. And in ASCA business, which is in charge of the Asia and the Central and South America, there is a growth of the NCAR2 in China and Brazil mainly, and that experienced JPY 22.9 billion of increase. and the upfront payment and regulatory and sales milestones, et cetera, related to AstraZeneca and U.S. MAC increased by JPY 5.6 billion thanks to development milestone income with U.S. EGFR in mutated NSCLC of that way and also upfront payment of the agreement of the strategic alliance with U.S. MAC for 3D XD ADCs booked.

And we have also received the African upfront payment of JPY 750 million from ASD for U.S. for RDXD. And from the second -- third quarter, this fiscal year through the end of expected exclusive period, it will be booked as revenue. And the ForEx impact was JPY 17.1 billion negative.

Slide 6 shows the factors contributing to the change in our operating profit I will explain about the background of JPY 8 billion profit. As I explained earlier, sales decreased by JPY 17.1 billion due to the FX impact. revenue increased by JPY 92.6 billion. And next, I will explain cost of sales and expenses, excluding the impact of FX. The cost of sales increased by JPY 28.3 billion due to inventory write-down on Daiichi Rana and unqualified products. And in addition, the sales increased by JPY 109.7 billion in real value, excluding the impact of FX rate. SG&A increased due to increase profit sharing with AstraZeneca. This represent increase of JPY 61.8 billion.

As for R&D expense due to the progress of development of 5D R&D investments have increased by JPY 30 billion. Total cost reduction due to exchange rate effect was JPY 19.4 billion. Actual decrease in core operating profit, excluding the FX impact was JPY 10.4 billion.

Next, on Slide 7, I will explain the change in net income. Core operating profit -- as explained earlier, decreased by JPY 8 billion, including FX impact. Regarding one-off income and expenses in the same period last year, again of the CEO of Daiichi Sankyo Espha shares was recognized as a one-off gain. However, this was no longer such impact from this fiscal year. and revenue decreased despite income related to the litigation with former Ranbaxy shareholders.

In addition, due to the CMO compensation fee following the change in the launch date of Har 3D, XD and the write-down of inventory for DATROWAY and Har3DXD, profit declined by JPY 34.6 billion. financial income and expenses increased by JPY 13.3 billion due to improvement in FX gains. Corporate tax declined by JPY 13.5 billion due to a decrease in profit before tax and decreasing effective tax rate compared to the same period last year. As a result, profit attributable to the parent company for the period decreased by JPY 15.9 billion year-on-year to JPY 130.8 billion.

Next, I will talk about our financial forecast for fiscal 2025, please refer to Slide 9. Revenue is revised upward by JPY 100 billion from the April forecast to JPY 2.1 trillion. This revision in corporate lower sales of Injectafer and Benifer at American region and decreased the milestone income for MHAS while reflecting the positive impact of weaker yen anticipated sales growth primarily driven by DATROWAY in Japan and U.S. and AIHAR2 in the United States.

Cost of sales is expected to grow by JPY 30 billion due to higher expenses from the upward revision in revenue forecast and FX impacts as well as inventory valuation losses for Daiichi Dona and unqualified products SG&A are expected to increase by JPY 65 billion due to FX impact and higher profit sharing with AstraZenica associated with increased sales.

R&D expenses are expected to increase by JPY 5 billion, primarily due to FX impact. As a result, core operating profit is projected to be JPY 350 billion, unchanged from the April forecast. OP is expected to decrease by JPY 15 billion to JPY 335 billion, reflecting the recognition of one-off gains and expenses through the second quarter. Profit before tax and net income attributable to owners of the parent, reflecting the revision to OP are projected to be JPY 355 billion and JPY 288 billion, respectively. The FX rate assumption for the third quarter and onwards are JPY 150 per U.S. dollar and JPY 170 per euro. The weaker yen against April forecast is expected to drive revenue by about JPY 68 billion and the core operating profit by approximately JPY 6 billion.

With this revision to the forecast, we now expect to achieve 4 out of the 5 KPIs for FY 2025, which is the final year of the -- midterm business plan which are revenue, oncology revenue, core operating margin before R&D expense reduction, ROE and DOE.

The exception is a core operating margin before R&D expense deduction. Regarding the core operating margin before R&D expenses, while the target was 40% Unfortunately, it is expected to fall slightly short. This is because anticipated timing of receipt of a portion of hard development milestone income is now in fiscal year 2026. We'll continue to make improvement as we move toward the 6 MTP.

Next, let me share with you the business updates. Please look at Slide 11. This slide shows the mat sales performance. The global revenue of the second quarter of FY 2025 was JPY 318.2 billion, JPY 57.1 billion increase year-on-year. And in all major countries and regions. We have achieved #1 of the share of the new patients in existing indications such as breast cancer, gastric cancer and lung cancer, we have established a position as under peer and since the launch quarterly review reached JPY 1 billion for the first time.

And after the whole year forecast, penetration in the chemo-naive hormone receptor positive and had to roll or super low or ultralow expression breast cancer market progressed more quickly than we have expected in U.S. and Germany. So we have updated our the forecast to the JPY 694.2 billion, increased by JPY 32.1 billion versus April forecast. And this indication achieved the #1 share of the new patient in Germany. And also this is a driving force in Germany, where it is launched only in Europe.

And also, we have started promotion in August in Japan. Next, let me talk about the sales status of DATROWAY. Please look at Slide 12. Global Product sales for Q2 of FY 2025 reached JPY 15.7 billion. Significant sales growth was achieved in the U.S. and Japan for hormone receptor positive HER2-negative breast cancer with prior chemo therapy. And in the U.S. for EGFR-mutated NSCLC exceeding expectations. Nobody, the drug has already been administered to over 2,000 patients cumulatively. For both breast and lung cancer, unmet needs are exceptionally high, particularly in the third line and later treatment larger-than-expected number of patients received treatment and Q2 results significantly surpassed expectations. Therefore, the full year forecast has been updated to JPY 37.8 billion, up by JPY 16.2 billion from the July forecast. Sales for the breast cancer are progressing steadily in both U.S. and Japan. We are promoting knowledge of preventive care and treatment for side effects such as dermatitis and dry eye through educational activities targeting at HCP.

Furthermore, this indication has already been approved in over 35 countries and regions. For lung cancer indication, following the launch of promotion, in the U.S. in June, it has already acquired new patients comparable to breast cancer within just initial 3 months, demonstrating a very strong sales ramp-up. We will continue to pursue deeper market penetration in existing regions and expand into new countries and regions while also expanding indications.

Our goal is to deliver HER2 as to many patients as possible who are in great need. Next, we will move on to the R&D update. I will now hand over to Takeshita Head of Global R&D.

Thank you very much, also. It's a pleasure for me to give you an update on the important clinical trial data for the last quarter. Many of these clinical trials are ones that are presented at ESMO or sometimes from the World Lung Cancer Conference. The first slide is the Destiny Breast 11. This trial and DB05 that you will see next represent a pair of clinical trials that bring into early-stage HER2-positive breast cancer in a curative intent setting. So for these reasons, these are 2 important studies. And first, on Destiny Breast 11, this is a neoadjuvant study and HER2 followed by TH surgery resulted in a pathologic CR rate of 67.3% compared to the old standard of 56.3%. So this is a rather clinically meaningful and large improvement in the PCR rates. And you can also see on the right-hand side of the slide, an early trend towards improvement in event-free rate, even though this is a relatively immature set of data at this point with a hazard ratio already of 0.56.

So this really represents the first positive global registration trial for a new agent in a new adjuvant HER2-positive early breast cancer setting in over a decade. Next slide. This is the other part of the pair of clinical trials in early breast cancer, DB05. This is a clinical trial of the post neoadjuvant setting of enter to in patients who remain positive after the treatment with a neoadjuvant therapy. And in this clinical trial, we can see that the post neoadjuvant and HER2 resulted in greater than have the decrease in the risk of invasive disease current or death compared to with a hazard ratio of 0.47.

So this really represents a second positive Phase III trial demonstrating superiority of NT2 over TDM-1 the first one being DB03 in a metastatic setting. The safety profile was good. And therefore, we believe that between DB05 and DB11, these 2 studies bring enter into the post HER2-positive post neoadjuvant setting as a second chance to achieve a cure and a potential for a new standard of care for eligible patients with this residual disease.

Next slide. In addition, please note that we have -- there are many regulatory achievements in gastric cancer, breast cancer and pan tumor setting. And I also want to make sure to note that we have PDUFA dates coming up first for the DB09 in January of '26 and DB11, you just heard about in May of 2026.

Next slide. This is for the DATROWAY way program, TB-02 clinical trial in the frontline setting for metastatic triple-negative breast cancer. This is a clinical trial in the frontline setting in whom immunotherapy is not an option. And we can see that in this clinical trial, we see both positive PFS benefit as well as positive overall survival benefit. And overall survival benefit is with a hazard ratio of 0.79 an improvement by 5 months compared to the control arm of with experimental or achieving 23.7 months.

This makes DATROWAY the first and only therapy to significantly improve over survival versus chemotherapy in this patient population. And we believe that this sets the standard for a new potential stenochemotherapy in this pipe patient population. Next slide.

This is the results of a clinical trial called Begona. This is an early Phase I b/2 study that was also presented ESMO. This is the other half of triple-negative breast cancer reservations. And in patients -- in this clinical trial, patients who were enrolled the -- of the PD-L1 expression. And it's important to note here that there is the addition of durvalumab in addition to the DATROWAY clinical trial. And you can see here that the response rates are very impressive with a response rate of almost 80%, but it's also remarkable that the spider plot shows very durable responses. And these are very encouraging.

And as you know, we do have this exact combination, the double combination of data and durvalumab being tested now in a randomized Phase III study in a patient population called DB05. This is an ongoing study, and we're very hopeful that we can replicate this outstanding data in a Phase III setting. Next slide.

We also want to mention that we have initiated a new trial of DATROWAY in bladder cancer, trophon urothelial 03. This is a new trial that just started in October of '25, just this month in patients with bladder cancer. And you can see that the DATROWAY was really expanding beyond the lung and breast cancers that you have -- you are familiar with. Next slide.

This is clinical data that was presented, not at ESMO, but at the world congress on lung cancer. And this is the ID8LUNG-01 clinical trial, a Phase II single-arm trial in patients with relapsed/refractory small cell lung cancer. This is our first oral study for the IXT program. And you can see that the response rate, the primary endpoint here was quite good. And we are interested in further pursuing this compound in small cell lung cancer and also we are having some conversations now with our regulatory agencies on this particular clinical trial data. Next slide.

I do want to mention here that the safety profile of IDXT in this setting in a clinical trial that you just saw was quite good. And on the basis of these data, the safety data and the clinical data the FDA did grant us a breakthrough therapy designation for IDXT in extended stay small cell lung cancer back in August of 2025.

Next slide. This is a result of the Rejoice OVARIAN 01 study. It's a Phase II/III study in which -- and at this point in ESMO, we presented data on various doses of RDX in ovarian cancer patients who have platinum-resistant ovarian cancer. And you can see that in all of those levels tested, there is very good activity of the drug innovarian cancer. And this allowed us to select the dose of 5.6 -- as a study for Phase III portion of the study based on the combination of the efficacy and safety data that we accumulated in the study that you're seeing here. Next slide.

Okay. So this is a summary of additional regulatory approvals and clinical trans data. And you can see that we have initiated 3 new studies and also that was approved in China for the DB01 indication. Next slide.

In the next few slides, I want to highlight for you some new trials that are starting in Phase I stage. First is the DS-3939 program, and this is a clinical trial data that was presented at ESMO is the Phase I/II trial, and this is really intended to understand the safety mostly of the drug. But okay, you can also see that there is early activity, we can see in patients with various types of cancers, including non-small cell lung cancer, and ovarian cancer. So this is very encouraging that we are already seeing tumor shrinking and efficacy in the setting of a dose escalation clinical trial. So we are very encouraged and we are hopeful that we can do further with this drug. Next slide.

There are a couple of new additional trials that are being started. So next one is DS-3790. This is a DXDADC. This is the seventh in our series of DXDADCs, and this one is directed at a target called CD37. CD37, as some of you may know, is a B-cell target. And so therefore, we are very interested in studying CD37 in B-cell malignancies, such as lymphoma. And so this is our -- so we do intend to start the study in the second half of the current fiscal year. Next slide.

DS51. This is a new program in solid tumor. And this is Daiichi Sankyo's first targeted protein degrader. So this is not an ADC, but it represents a totally different mechanism of action that is a targeted protein degrader. And we are very interested to initiate this clinical trial. We have not disclosed the target protein, but please do note that it is intended for prostate cancer. Next slide.

Finally, the last one is DS-5361. This is a quite unique mechanism of action. This is a small molecule NMD inhibitor. NMD stands for nonsense-mediated messenger RNA decay. But typically, if there is a mutation in the gene, that results in a nonsense mutation, that messenger RNA is spontaneously degraded through a mechanism known as nonsense-mediated messenger on RDK.

We have developed a small electro -- that inhibits this decade. So therefore, what this really means is that in many cancers where there is nonsense mutations, frameshift mutations that result in nonsense mutations the messenger RNA remains intact and then, therefore, translated by the cell into proteins and peptides that are typically not expressed by that cell. So this results in expression, therefore, of neoantigens that are unique to the tumor cells. And so please consider that this small molecule NMD inhibitor, therefore, is a an attempt to increase immunogenicity of tumor cells and therefore, is in a class of what we have called immuno-oncology therapy. So this is a very exciting, very unique mechanism, and we are very excited to be initiating a study with this compound. Okay. Next slide.

Okay. So in terms of news flow for the rest of the year, that this is shown here. As I mentioned, we anticipate upcoming regulatory decisions with the PDUFA that already decided for DB09 and DB011. In addition, we are expecting data retails as shown here on the right-hand side. And as the data become available, you'll see announcements from us. Okay. And that's all from me and -- back to you.

[Foreign Language]. [Operator Instructions]. And the first question is Yamaguchi-san for Citigroup.

This is Yamaguchi of Citi. Let me answer my first question. And this is about the first half result, especially limiting to Q2 only. As you have explained, the gross profit, in relation to the theme and also manufacturing related matters, there was the increase of the past. And also SG&A. There's an increase excluding the core promotional related matters. And there are some specific and also very special increase -- excuse me and core basis the sales, there are fees of the cost. And then with -- Is it because that there is something which is unexpected? Or is it kind of the onetime issue and your main business is going fine or not, that is my first question.

Thank you very much for your question. This is Ogawa speaking. Yes, our main business is doing really fine, and how to that raw and our major products are doing very nicely. And as to SG&A and for Q2 and prove share part. Naturally, due to the NHAR2 and DATROWAY in relation to the profit share that will be reflected and that there is no change at all. In other parts of the SG&A, and we call that is others that you may see this is large. But if you look at the whole year for FY '25, we also reflect the impact by the foreign exchange. So at the end of the year, we expect the JPY 30 billion increase. And we have 19 million. Therefore, that would be about JPY 11 billion. So it is a slight increase. And therefore, SG&A, as we did before, oncology business to be supported. We need infrastructure for that. and also investment to the organization and the human resources continue to be incurred.

And I also would like to give some additional comment about our costs. And please refer to some supplementary material, and there is some adjustment table that is the translation from the core to the noncore. This time, well, we normally do not have an opportunity to ask you to refer to this document. So I would like to ask you to refer to the table, taking this opportunity.

And I would like to explain based on that table, and we have onetime cost this time JPY 18.5 billion on a core base, in a core operating profit, that was a onetime cost JPY 80.5 billion was booked. And then this time, on the bottom, especially in this material, in the mid, we have some notes here and to show our current profitability, core operating profit is disclosed. And this time, especially in -- based on the definition, on onetime, but the large amount of the profit and loss is included. And there is something which applies to this criteria. For example, in this adjustment table, for example, there is a compensation to CMO loss. And that has been already -- that wasn't explained in the presentation. And this compensation was JPY 12.7 billion. And in addition to that, this compensation, especially for the HER3 study result based the changes and the strategies happened when made. And therefore, DATROWAY and HER3 inventory the impairment or the loss is really due to these changes in strategies. And therefore, those are all regarded as the onetime changes or the repayment.

Therefore, we have JPY 17 billion. That is the largest one. And such a onetime amount of the registered here. Therefore, the full base adjustment took place. And that was the SGNO and we have JPY 29.6 billion. This is a huge amount, and this is prior to the cost sharing with the partner. And adjustment after the cost the sharing is reflected in that JPY 12 billion or so, and we have increased on decreases in the food based on -- base adjustment, there are some -- the adjustment -- major amount of the adjustment made. So that may be a little bit difficult to understand, but this is what we did. And in a core base in the second quarter, Daiichi Rona and NHAR2.

In the case of NHAR2 decision in the manufacturing lots, there are a series of the unqualified lots generated, and those are going to be disposed as from our inventory. Those are included in the noncore area. And to NHAI, the case identified and also the counter measure has been already taken. So this will not give any impact to the plan of the supply. And for Daiichi Rona, and there is a major reduction of the demand. Therefore, we have booked the inventory loss, and this has been the lengthy explanation, but that was the thing.

And I'd like to have another short question. This is about the DATROWAY doing very nicely. And since we have cancels with us, so we would like to understand the situation, competitive situation, especially both in lung cancer and breast cancer situation in United especially the competitive landscape.

Great. Thank you for the question. So when we look at data, and I'll talk about the U.S. specifically, we're seeing very good adoption in both the on HR-positive HER2-negative space and also the non-small cell lung cancer space.

There's 2 different dynamics going on. When you look at the lung cancer space, this is a large group of patients where there's not very satisfactory options today. And there's many patients who have gone through numerous treatments and they were waiting for something new. DATROWAY is filling that space today, and we're seeing very nice uptake and reports of excellent experience. In the breast cancer space, DATROWAY is also doing well. And I think what physicians are mean is that this is a drug that they are finding they can manage the toxicities, they're seeing that the schedule is advantageous compared to the competitor. And those 2 factors are really causing people to trial with the drug. And as they gain experience, we expect that is going to accelerate.

Let me move on to the next question, Mr. Hashiguchi from Daiwa Securities.

Yes. I am Hashiguchi from Daiwa Securities. Similar question from myself. In terms of the core LP inventory write-off, are we expecting the similar inventory it off going forward? And one-off cost is it's called the noncore, but this is core. So probably the similar write-off May happen again into the future. So with regard to Daiichi Rona, depending on the market situation. Do you think it is likely to do another write-off of inventory into the future? And with regard to N2, I know you have taken action already. But can you explain the background why that happened? And what exactly did you do? Do you have any information that will give me peace of mind.

Sorry about that. I was muted. Thank you very much for your question. With regard to Daiichi Rona, at this point of time we have put this number. I mean based on the latest information, when we see some changes in the future, there may be another write-off, but this is based on the latest best estimate.

And with regard to NHAR2, that actions were taken, and we have already identified the root codes, and we have taken a major to prevent the same thing to happen. So you can rest assure that same thing will not happen. I cannot deny the possibility at for sure, but at this point of time, we have taken corrective major.

Now my second question is regarding that your way. breast cancer. It's progressing better than your expectation. Why is that? What is driving better-than-expected performance? And also can you explain about the NHAR2, you oftentimes refer market share. What about the DATROWAY in breast cancer? What's your market share right now? And truck to ADC compared to the competitor -- ADCs, how do you compare your products? Is there any more room that you can take share.

Thank you for that question. So to answer your question, yes, there is lots of room to take more market share from the existing competitor, which is a drug called TRADOLVI. DATROWAY is really in its early stages of launching in the breast cancer space. The reasons why people are eager to try this drug is, number one, the efficacy looks very good in clinical trials. Number two, in the real world, DATROWAY has a very nice scheduling advantage as it is dosed every 3 weeks, the competitor is dosed day 1, day 8, day 21. So you can imagine the inconvenience of going to hospitals or clinics far more often.

And number three, the toxicity profile of these 2 drugs, DATROWAY and TRADOLVI, they're different. And there's many physicians who -- and patients who struggle with the toxicity of TRADOLVI being neutropenia and difficult diarrhea, which can actually cause [ frontropenia ] and place patients at a higher risk for going to the hospital. And so they see DATROWAY as a more convenient potentially an excellent drug, and they want to try it. And so that's why people are using it more than we thought. And I'm happy to report their experience is matching their optimism. And I think with the data that we shared at ESMO in a triple negative breast cancer space, that's going to add to the excitement of this product, .

Ueda of Goldman Sachs. I would like to also ask you about the inventory write in a core base and Daiichi Rona and NHAR2 were included. And what was the specific amount of money? And without this amount, the core base the gross profit rate should have been the same as the level of the first quarter or not? Just roughly, what was this impact size?

Thank you for your question. As to the sense of the size with NHAR2, about JPY 5 billion and Daiichi Rona, about JPY 5 billion. That was the rough size. So that will be about JPY 10 billion totally. And in the second quarter, and we have a high cost ratio, as you understand. And then with this JPY 10 billion, then it is about a 1% increase of the cost ratio. And then this term, we would not repeat the same situation as we expect. Therefore, in the third quarter and after, we will see the improvement of the cost ratio. Therefore, the whole year, we expect a rate of 21.9%.

Thank you. This is a follow-up question of that. And in a core base in the past quarter to the second quarter, the cost ratio seems to be worsening greatly maybe by 5% or so. And the background is that from first to second quarter, there wasn't any, however, the product mix greatly. So what was the contributor of this worsening by 5%. As far as you see in the second quarter, vaccine sales was reflected. So that's why this contributed to the worsening of the rate of the cost.

Then if that is the case, then -- excuse me, the second question is about the modification of the -- and the revenue, you have raised by JPY 100 billion. So the core profit -- operating profit hasn't been changed. So with the ForEx, there will be the increase by about JPY 6 billion. And with NHAR2 sales increase and so forth. Of course, there is an increase of the profit share, but in line with this increase, then there will be the increase of the profit also at the same time. So are there any offsetting factors.

For example, NAHR2 may be reflected. But what are the factors to offset so that core operating profit would stay flat. Thank you for your question. Yes. in NHAR2 and Daiichi Rona cost impact is, yes, the 1 thing contributing to this. Another thing is the milestone income, and there is some shift of the timing DB05 or 11 had expected its milestone payment for this fiscal year. However, that will be postponed to the next year.

And 11, we have some results already that there is some shift expected -- Excuse me. So the milestone on the Page 38 and how can I interpret the table and NHAR2 milestone-wise? Then versus the April forecast, development milestone was in positive number. How can I understand that?

Thank you very much for looking into the material very in detail. And as of April, there wasn't -- the PV09 was not reflected. However, this was -- this is reflected this time. so DB09 and based on the PDUFA January, we have made some changes. That is the situation. Then the development milestone wise, that the number is positive. Therefore, rather the onetime impact of the cost and also the increase expected for the SG&A. So these are offsetting the increase by the increase of the sales and profit, that's correct..

As I have just -- well, what I have stated was not really wrong. Yes, but I have stated correctly and about JPY 10 billion or so the milestone payment cut.However, as of the April when we made the announcement last time, well, this wasn't announced at this time, but this was reflected already in the forecast at the time. And PDUFA, however, hasn't been determined. DB05, 11 milestone wasn't disclosed in the financial documents at the time. However, this time, we are now giving explanation additionally. And yes, so how you understood was correct.

Next question is from UBS Securities. Mr. Sakai, please.

Hello. This is Sakai from UBS speaking. The one-off profit and loss. The income related to the litigation with the former Ranbaxy shareholder, JPY 4.2 billion. IHA, sorry. I think it was in Malaysia as hospital groups. So the litigation was filed with them has shares, but you took some court action to make sure that -- does not sell the shares. But then IHA is claiming that they are producing some losses in total of JPY 200 billion. And this litigation income is positive, but this is a legal procedure here. So I'm not sure if you can comment on this, but JPY 200 billion. This number, when it's misunderstood by the market that will lead to the skier situation. So I just wanted to clarify what's going on.

Thank you. IHA subsidiary TK has made a complaint. And this is the amount of the compensation based on their complaint, and we believe what they are saying/it does not have any ground. So we cannot agree with them. We are going to challenge them. We are proceeding with the legal procedures, whereby we make a reasonable segment, what they are saying we believe is groundless JPY 4.2 billion income this time with regard to that. So far, more than JPY 50 billion loss litigation. The total we expect was JPY 50 billion. And finally, we were able to receive JPY 4.2 billion out of JPY 50 billion.

Does the income received separate from that litigation [indiscernible] dealt at the Tokyo District hold. Is that the situation right now?

Yes, that's our understanding, yes.

Another question from myself. A question for Kira-san. Did I see data finally taking off. You said -- for breast cancer, no small cell cancer and taking some shares from through Derby. Given all these comments from you fourth ring, southern ring and fourth ring, that way is being used regardless of positive, negative.

Yes, the indication is not trope 2 specific. So the indication for breast cancer is HR-positive, HER2-negative regardless of TROP2 expression doctors aren't testing for TROP-2 expression today. So it's agnostic to that. And you're correct. We're getting usage in the third and fourth line. It's growing every week, we look at the scripts and so we'll see that adoption continue to grow. And the same is true in the non-small cell lung cancer space. We're getting late line use today, and there's no testing for TROP-2 in that space as well.

That remains to be the use for southern ring and fourth ring.

Yes. Today, that's where most people are using it as they gain experience I fully expect that it will move earlier and earlier. And just as a reminder, the triple-negative breast cancer data that we shared at ESMO, that's first-line metastatic patients, triple negative. That's first line. And I think when people look at that data and they see the safety profile, that's going to really add confidence and assurance to move this drug up earlier and earlier.

Next question, Wakao-san of JPMorgan, please.

My first question is about the American region situation. Injectafer and Venofer, as you say, in the second quarter, the results was rather poor. And this term, the plan has been downward corrected. And what are the factors? And also, please tell me the future prospects.

Thank you for your question. And so far, especially in terms of Injectafer, we had so many challenges to overcome. The one thing was high dose market. So has a very severe competition and competition is getting severe. And with that as a backdrop, and Injectafer and expect usage is now on the decline.

We have forced to change the sales forecast. And for Renova, yes, there is a high demand. And also, we have some significant share However, the competition appeared in August, the generics were approved and the 3 companies had launched their generics. So well, the impact size so far is still limited. But after the third quarter and onward. There will be the pressure to the volume and price are expected. So considering all those factors, we have decided to make a downward correction of the forecast.

Listening to your explanation about the Venofer, there are some generics already available. Therefore, the future is not really right. And for injectable situation is getting very difficult. So injector at Venofer at American region expects a decline. And then how you can maintain with the generic injectables. Would that be positive?

Yes, that is the situation. And further, we had of American region, we expect to make them at the ADC manufacturing site, and we are making investments towards the -- until the end of fiscal '27, we plan to start at the manufacturing over there. So they would be having more importance in that area.

My second question is about new projects just briefly, 3790 and 9051 and 3790 for the DXC advantage to the hematology and Wednesday [indiscernible] at 5361 in summer, you said that you are going into immuno-oncology. And is it one of the immuno-oncology drug?

Yes. So let me answer the quick answer first. 5761, yes, it is part of our immuno-oncology program for sure. Yes. And your second question about the 3790 program. I think the question was why was this chosen as our target. And we did use this because it is a very specific cell target. And it is somewhat different from other types of B-cell targets such as CD20. So it allows us for some differentiation versus other targets. And we do think that this is going to be a very interesting one to study with the DXT ADC platform based on a huge amount of preclinical data that we have generated so far. And also the fact that there exists already at least one ADC in Visa malignancy called [indiscernible] and there is a precedent also. So I think we're very hopeful to see very interesting data with this new compound.

Let me move on to the next question. Soghi San from Bernstein.

A couple of questions to Dr. Takeshita. So first of all, the data way you have just the disclosed asset now you're initiating a Phase III [indiscernible] 03, you presented a very good strong data in your first line at ESMO. So this is -- this wholly makes sense. And also this doesn't appear to include patient selection based on QCS. So so far, looking at different cancer type, it looks like the non-small cell lung cancer is the one requires the QCS based patient selection. What are the concurrent the hypothesis that what kind of factor the makes QCS base the patient solution required for the data?

Yes. So yes, you raised a very interesting biological and clinical question. yes, in some diseases like breast cancer, we don't seem to need a biomarker selection, whereas in lung cancer, we are proposing to use this very fancy one called the QCS digital pathology technology. I think your question was what makes certain cancers you require biomarker and why others do not require I think that's your question. And okay, to be very fair, it's a lot of, I don't have a very good biological explanation for this. And in fact, what we are doing is that with each indication, we are testing see whether or not a biomarker is needed or not and then proceeding to do randomized studies and registration setting once we have an understanding of whether or not a biomarker is required.

The second question is around new assets beyond ADC. So for ADC, we understand that you have a long the long-term effort to really be improve in modality, and now you're expanding the assets through that modality. What will be the you are differentiated in the strength in the new type of assets? Is it a really mortality base, which you have a differentiated modality base, or there's something else?

Yes. So we are a modality company. We -- when I say modality, we're talking about a platform like the ADC platform and once we are -- because we are very good at generating ADCs, we can generate all kinds of ADCs, not just ADC dependent on the payload of VHT, but many other payloads, many other linkers -- so that is one important part of our longer-term resource strategy. But in today's presentation, you can also see an emergence of yet another modality. For example, with this TPDs, the targeted protein degraders, that is yet another modality that we are very interested in. It's a modality that other companies has also invested in, but we too are very interested in this part. And then immuno-oncology, the 5361 program, it's an immuno-oncology program, but you can see that it's a very different type of approach we not only compared to most other companies in the sense that we are using really a very novel way to increase neoantigen presentation by tumor cells. So I do want to mention therefore that, yes, we have all kinds of ADC modalities, but we are expanding to all types of modalities.

Next question is from Barker San from Jefferies Securities.

Stephen Barker from Jefferies. I'll ask my question in English if that's okay. My first question is about capital allocation. In May this year, you got approval to buy back $200 million of shares, which you haven't executed. And my understanding is that you wanted to preserve your cash, for example, for acquiring new assets, but it's already a [indiscernible]. What's going to happen between now and the end of this fiscal year? Is it possible that you will not buy back the shares and you also will not acquire in new assets.

Thank you for your question. Let me ask in Japanese and -- share buyback, that was your question. And is there any possibility that we are executing that or not by the end of the time. As we have explained, the it depends upon the software model and so forth, and things are decided comprehensively to find the right timing and the right way to do things. So if the write-in comes, then we would execute, but the important point here is that towards the goal, future, we have to make investments, and we have to allocate the cash for that. And also, we have to invest in R&D and this CapEx lower, and this should also be carried out in good balance. And also acquisition of the external assets would also be one of the options. So if opportunity arises, then we also would like to allocate to the fund. So we will make a comprehensive consideration to design the timing and to execute on the plan.

My second question is related to R&D. So DS-9051, protein degradation. I was wondering if you could talk a little bit about how you see this asset fit into the bigger picture? Do you see potential for this asset in particular or other protein degradation assets to be combined with your ADCs?

Yes. So strategically, we think of this 9051 in two different ways. One is that it is our first one in a series of TPDs, targeted protein degraders. So from that standpoint, it's a very important first step for our TPD program. And as I mentioned, there is interest of this compound to target prostate cancer. And as you know, we have some additional compounds and assets that are active in prostate cancer. So in the longer term, you can imagine various combinations that might be interesting and really also another way for us establishing ourselves in a specific disease such as prostate cancer in a way that we are well established now in breast cancer.

So you say you have a series of TPD programs, so we should expect to see more programs like this coming to the clinic?

I think in the future you can expect to see more, yes.

From Morgan Stanley MUFG Securities we have Mr. Muraoka.

I am Muraoka from Morgan Stanley. I have a question to CEO, Mr. Okuzawa. Earlier Mr. Okuzawa was commenting on buyback. And based on what I have heard from Mr. Okuzawa, I have a follow-up question. Your stock price up quite significantly today and almost the same level as a brief summer level. I know you are inclined to buy something, but I really appreciate if you can execute another buyback just in this timing. Is there anything that you can comment?

Mr. Muraoka, I understand what you are expecting of us. Well, investigate all possibilities, and we make a decision of cash allocation. And the share buyback is one of the options, but that is not the only option. And in terms of the shareholder return, as I have mentioned from previous time, I am committed of DOE 8.5 and more. And this is something -- this is a commitment that I made as a top management, and that is always sitting in my mind. So as I mentioned in my presentation, important KPI like DOE 8.5% and more regardless of the share buyback execution, this is a commitment that we have. I would like to reiterate that once again.

2006 [indiscernible] is not a level of share price, which drives or triggers a share buyback. So I cannot say anything about that. We are not following the short-term up and down of [ Asure. ]

One, with response to the onetime cost, which is the compensation fee, I think this is related to [indiscernible] our launches today. So you need to pay [indiscernible], I think I understand. But due to the compromised quality of CMO service, you are not really able to receive approval in a timely manner.

Would it be not fair that you pay compensation fee to CMO? Can you explain.

Thank you very much for your question. [indiscernible] 901 study. In this study, we've asked to handle complete response rate as a result of the FDA audit and then we told you that, that issue has almost been resolved. And your point is indeed valid. And probably this CMO didn't have a good quality of service. But DXT is not approved yet for initial lung cancer, following confirmatories [indiscernible], didn't meet our expectation. That was the major reason. So this was unfortunately, due to the lack of performance of our compound. CMO and our relationship is as follows. We have certain expectation on technology on SCO and we have a demand forecast based on such we need them to produce a high-quality product in a timely manner. And as a trust relationship, we thought we had. And based on what happened, basically, we thought that we may need to pay cancellation fee as such as why we booked this number. DXd-ADC other than [indiscernible]. Exist, and this is a partnership with Merck. From Merck perspective, how can we use the same CMO in a different manner. It's a matter -- no matter you fast it to the discussion, and that's needed, and we thought that this is a reasonable landing point for all the stakeholders.

The next question is from Tony Ren San from Macquarie.

Tony Ren from Macquarie. Can you guys hear me?

Yes.

Okay. So first question is to Mr. Ken Kellerson. I was wondering 12, the data revenue, I wanted to ask you if you could possibly give us a sense of the revenue mix between lung cancer and breast cancer. I think I heard you saying that they're about equal between lung cancer and breast cancer. I just want to confirm I heard correctly.

Yes. Thank you for the question. And you are correct. When we look at the U.S. marketplace where we have both indications, actual revenue is pretty close to 50-50 at this time. We believe the number of patients are about the same because the length of therapy between those two indications in terms of progression-free survival is about six months for both. So we think that is a good proxy since revenue is about equal there. We think it's about a 50-50 split right now. I would say that the early adoption of lung cancer gives me the feeling that we're going to see the lung cancer market grow even more than the HR-positive HER2-negative breast cancer space as we look at the next couple of months at least. Does that answer your question?

Yes, it does. But obviously, the breast cancer, you guys have the first [indiscernible] coming, right?

Yes, my comment was exclusive to the HR+ HER2-negative. When we get the triple-negative breast cancer indication based on the profile of the drug, where -- there we saw a doubling of overall response rate. The competition today cannot offer that. We saw really impressive progression-free survival. We saw obviously the only drug in that space to deliver overall survival. And then you've got some of the convenience advantages I spoke about earlier, I expect this drug to do very well in that space.

Yes. Absolutely. That's the feedback I heard from ESMO as well, a number of [indiscernible] they think they were switched from today to [indiscernible]. Next question to Dr. Takeshita. This is about your new asset in urothelial carcinoma. You're talking on your 03 study? This is obviously like it's being attempted in the post passive and pembro setting. They have roughly about 55% market share in online, within the U.S., they have roughly about 55% market share in frontline metastatic cheilocarcinoma because it's actually quite a toxic combinatorial regimen, not to mention the financial toxicity quite expensive regimen as well. Are you also looking to target the remaining 45% as well patients who are just using chemo combinations?

Yes. Thank you for that question. And yes, we are necessarily under consideration.

Next question is from SMBC Nikko Securities. Mr. Wada.

I am Wada from SMBC Nikko. I have a basic question, your ADC technology is differentiated from other companies in that way. But can you talk about the point of depreciation to see that collaborated with Innovent. And they also have been focusing on ADC, and there are many Japanese companies developing ADC that you have ADC technology and uncleavable linker technology, your phyto-specific modulation. [indiscernible] activity bind drug [indiscernible] I feel like your ADC technology is being distributed the [indiscernible], I think it is highly differentiated and very competitive. But for the brands, I think there are other players if you are looking into the same technologies, I wonder what's your major point of differentiation.

So our research group has been working on ADCs are very sourced for many, many, many years. And so we have a whole library of linkers, payloads and binders. And so currently with the -- in the DXd ADC program, we are well underway in the development of those DXd, the first-generation ADCs and that has incorporated the best of the linker technology and best of the payable that we have in the DXd series. And in addition to that, I have to say that a major differentiator compared to competition, has to do with time. I think we are for head of what other company is doing, especially when we look at antigen. Now in a future generation of ADCs, as I mentioned, we have a whole library of linkers and payloads, and based on all the biology that we understand with these payloads and linkers, we can create new drugs with a linker releases the drug sometimes not in the cell, sometimes on the cells, sometimes just outside the cell, sometimes at right micro environment. We can create all those new different ADCs, as just simply based on bearing the linker. The same thing with the payload. We have a variety of our payables that we can use. Sometimes they are cytotoxic in a way that DXd is when we have [indiscernible] biological targets and other targets and other types of payloads that are not necessarily molecules that we can use to create new entities and new ADCs. So I think that's really our major advantage is that we have invested a huge amount of research in the agency space.

And this time introduce a new program to [indiscernible]? This is frameshift mutation inhibitor sounds quite novel. I think in the past you developing, and I was wondering maybe that kind of trigger the development of the new program. And my question is to confirm [indiscernible] so through this institution, the new antigen -- case-specific neoantigen [indiscernible] activate killer cells and so that we can identify the tumor [indiscernible]?

And specifically, we are targeting what we would call frameshift mutations which are very common in cancers. Frame mutations typically results in shifting of the triple read-through of the amino acid codons and resulting sooner or later, typically in a termination code on. The drug allows read-through of that termination code on to produce additional sequence of amino acids that are not typically coated in the normal genome. So these are really the genesis of the neoantigen-s, we're talking about that's very specific to that cancer cell. And as noted on that slide, we can also see that combination of this drug with a checkpoint agents such as PD-1, really enhances immunologic system to recognize and eliminate tumor cells, at least in animal models.

Next is the last question from JPMorgan Asset Management, Wakao San.

This is Wakao from JPMorgan Asset. Can you hear me?

Yes.

I have two questions. The first question is about the numbers. Well, it is rather complicated the core in profit, and there is some comparison the challenges then this year, you have JPY 10 billion of the [indiscernible] losses. And then last year, you have JPY 12.2 billion of the realization of unrealized therefore the [indiscernible] 1.2 there is difference between [indiscernible] and [indiscernible]. I expect to interpret such way will tend to explain such as things because that is rather complicated. So I'd rather you to explain it more in detail.

Thank you for your question. Let me apologize that our explanation was not that compete. And realized profits. In the past fiscal year and this year, the increase -- and increase of the revenue, and there is JPY 11.2 billion and contributing to the negative growth of the revenue. Yes, that was one of the factors. So this is the previous year, this is really the difference coming from that. And also about the cost of the sales and the core operating profit. In the presentation slides, there is some description on Page 6. And then we have an increase of the cost of sales. And in this cost of sales increase about JPY 10 billion due to Enhertu and [indiscernible] evaluation rules included in here. So these factors have been explained. So these are the factors of the changes or the variabilities in the core operating profit. So in other words, so I'd like to confirm separately. But in the past year, this year, there was a [indiscernible], but there was a onetime unrealized profit that's included last year. But on the contrary, this year, it is a core, but there is some specific growth of level.

There are the difference between this year versus year over JPY 21.2 billion.

Yes, you are right.

Another question is about R&D is feeding up at 3790, the CED is expressed in being [indiscernible] working on the ADC or DXd as a core. However, wasn't that progressing? But on the other hand, [indiscernible] when I checked at clinicaltrial.gov, and indeed [indiscernible], but you just said the hematological malignancy. So you recruit a wide variety of the patients. And it only says the hematological malignancy assess, and you do not say DLBCL is not limited to the DLBCL. So why don't you limit it? Why do you -- when can you develop to cover a whole range of different hematological malignancies.

[indiscernible] as a category includes not just DLBCL, but many other types of lymphomas, such as follicular lymphoma, mantle cell lymphoma, margin lymphoma. Are there many types of B-cell malignancies besides just DLBCL, so that's one. And in fact, there's another B-cell malignancy called chronic lymphocytic leukemia, which also happens to be CD37 positive. So this is the reason why the resignation of hematologic malignancy is used in a clinical trialist.

There are other people raising hands, but unfortunately, we have exceeded the scheduled time. So with this, we would like to conclude the Q&A session part 1 of this -- the financial results reporting. And please contact IR members so that your question will be answered later.

Thank you very much for your time. And after this at 5:10, Japan Standard Time, we would like to start the question-and-answer session of the people from the press. Thank you.

[Break]

Thank you very much for waiting. Now we would like to start looking the Q&A season with media. We have representative President and CEO [indiscernible] and [indiscernible] Global R&D, Dr. Krishnan. And we also -- we had the [indiscernible], Director and Head of Oncology business. We have Ogawa, CFO of the company. [Operator Instructions]

First question from [indiscernible] Mr. Yanagi.

This is [indiscernible] from [indiscernible] Technology Business. I have two questions regarding R&D. First question is about pipeline drops from the last of key pipelines, have been comparing a list of key development pipelines out of last October, we leased as of July and two clinical studies used to have been drops from the [indiscernible] pipeline list. This atropine [indiscernible] 02, which was the phase as much Tuesday in China. And the other is DS-1055, which will have Phase 1 in Japan and the United States. So could you kindly share the reasons why did have been removed from the list.

Yes. For the DS-1055, we have terminated the program due to lack of efficacy we saw in our Phase I in clinical trial. And on the pan tumor trial, I don't -- I actually do not believe that we have terminated a pan-tumor program. So I think I'm pretty sure that it's continuing to do a survey in centering. So I think it could start going on.

And my second question concerns the DS-5361 measured on Slide 29, has the instruments that they already commenced. And if not, could you please let me know be anticipated to be date?

Yes, 5361 program, it just started this month, October 2025.

Next question is from [indiscernible].

This is [indiscernible], can you hear me?

Yes.

Up to two questions, right?

Yes, two questions per person, please.

Understood. The first question just the risk of the clarification confirmation. As to the inventory write-off. [indiscernible] and [indiscernible] were the major courts and why that already invested the course. And can you please repeat on this as much as you [indiscernible]?

Thank you for your question. Those of them they have different reasons. We originally planned the usage rate and also the immunization rate declined so that the raw materials and products we decided to use and one used any longer, so they were written off. And as to [indiscernible] in the course of the manufacturing, there were some lots which were unqualified for shipments. Course was identified in the manufacturing process and the measures to gain the votes already been taken and implemented. And therefore, we do not expect any reference of the such program, and that has been a really concerned. And those are the expected write-off in relation to these.

Another question is on onetime the CMO inventory loss -- excuse me, CMO, the compensation. And can you please explain again briefly because I couldn't get it completely.

Thank you for your question. Our CFO damage compensation how 3DHD projects -- product cut development strategies have been greatly changed. So we have completely changed our launch program well schedule. And we have decided not to handle that product for some time. Therefore, we have decided to ask a CMO to the cancel at a lot manufacturing line. And for CMO, they actually have some capacity set for us, but that capacity will be used. Therefore, we were forced to pay the cancellation fee for that, and that will be JPY 12.7 billion.

Understood. What do you mean by the change of the development strategies?

3DHD this year, or fiscal year, we have decided to withdraw our filing to the authority. So in relation to that, for the moment, we will postpone the launch far ahead in the future. Therefore, that is the major change of the development strategies. And we have changed our launch schedule also at the time.

Next question is from us [indiscernible].

This is [indiscernible] speaking. Can you hear me?

Yes.

0

China ADC, I have a question in relation to that. I do understand your the Chinese ADC technology, how do you describe their threat? And advantage or strange. And I think they're setting up with the production capacity, not only R&D capability, they are setting up a lot of production capacity right now. How do you see those movements.

Yes. So as you are aware, there are a number of ADCs that are being developed by Chinese biotech companies, and they are being reported now in various conferences. Many of them have similar targets and similar halos and similar lines, but they're not identical to the ones we use. I think many of them what we would call fast followers, that once your target linker or pay loss has been validated by another company, there is a fast followed strategy that these Chinese auto companies are following to immediately begin the Phase I and highly abbreviated Phase II program before launching into a much larger clinical trial, all within China. For us, it's very difficult to understand whether or not the Chinese data is directly comparable to what the clinical trial that could be expected in a much larger global setting. In part because of the differences in the standard of care between China and the rest of the world. And so I think it's really from a patient standpoint, of course, it's very nice to have options. But in terms of -- I think they're talking about competitiveness, I do want to make sure to mention that typically, from a time line perspective, we are going to be ahead of the fast followers. They actually, as I mentioned, they are following. And our major emphasis is on clinical trials that are being executed, not just in a single country like China, but in various parts of the globe.

Well understood. In terms of the production capacity, not only R&D capability, like how do you see their production capacity?

So you're asking how do we see Chinese companies efforts to expand their production capability in China, correct?

Yes.

We do work with multiple number of CMOs. And going forward, we can continue to work with the best CMO. So not only capacity but also high quality is quite important for our CMO selection. And so again, we are always looking for the CMO based on such criteria.

So you also use CMO to expand your production capacity, not just fully reliant on your own capacity.

Well, our own capacity, external capacity in terms of the breakdown of those two, we would like to increase the percentage of our internal production capacity going forward as the direction. On top of what's been planned, is there anything that you are seeking for as a next investment opportunity? No.

Next question is from [indiscernible].

[indiscernible] from [indiscernible]. Can you hear me?

Yes, I can hear you.

0

Listening to the discussion with analysts, the external assets could also be purchased. And do you have any specific idea or candidates to paces, if you have anything, considering, please tell me.

Thank you for your question. In activities, the business development is something which is always the active, such as the licensing in acquisition of the technologies from outside and so those are included. And as you know, in fifth midterm plan and have reached pipeline internally, and then we will be making investment internally for R&D. And the 5D DXd entered the pipeline opportunity is very high now. And then in the next 6 NTP, and we believe that we can now see the flourishing pipeline, but on the other hand, our growth speed is quite passed in past five years of this NPV, their revenue has doubled from JPY 1 trillion to JPY 2 trillion. And in the next 5-year midterm plan period, the top line will further grow as we expect to in such a scale of the business and also the rapid growth, the speed of the company size and the scale, then in Tokyo discovery team have very talented people, and they will find a very important compound and others, one after another. And as to share the part of it net blow, so to speak, an in-house growth engine is something that we are -- we have a lot of expectations. But in addition, will be combined with the possible potential acquisition from our side. And that the major point in the next MTP. And then what would be the potential target? Well, in principle, we will focus mostly in the oncology area, but we are really limited to that. In terms of developmental phase for the late stage as it ADC will be the mainstay. And also, we have quite a rich pipeline of program in the later stage. Therefore, rather, we would like to find an asset in much earlier stages which we can grow in 5 years. And then we can expect the late -- the clinical development or the launching in the 2 MDP ahead after 2030. That is what we're thinking about.

And one more question, [indiscernible], the declining immunization rate. And of course, the maintenance of the manufacturing capability important. But in the new at administration and safety and health security is 1 of the major focus with them. And then what do you expect from Daiichi administration?

Thank you very much. The new Prime Minister [indiscernible] has a very encouraging words, and we feel it was very encouraging to us. And Daiichi messenger RNA vaccine of COVID-19, and we were the first to develop domestically, the vaccine against it. enable enhancement of the public health in Japan and also cope with the pandemics, we would like to continue to make great contribution. We are quite motivated to that. And in addition, including [indiscernible] and COVID-19 vaccine, last market situation, quite frankly speaking, it is quite difficult and immunization rate was not as high as we had expected due to the shrinkage of the subsidy from the local authorities or national government. That was one of the factors of declining immunization rate. And COVID-19 is built the threat for all the public health in Japan, and we will confirm to that position. And the government support to promote the immunization the variety of economic assistance and also the support from the government would like to seek to support us as a provider of the vaccine, so that we can fulfill our mission.

Due to time limitation, the next question will be the last from Nika [indiscernible].

Can you hear me? This is [indiscernible] speaking. I have a simple question, basic question, if I may. Earlier, you talked about the CMO compensation fee, [indiscernible] I think this is related to the withdrawal of application in the U.S. And when I look at the current pipeline, Japan, U.S., Asia, Europe in those regions, is development program still going on, or is there any plan to terminate?

I think you're referring to HER 3 program. And certainly, we are continuing to develop this drug HER 3 ADC in many different settings besides just lung cancer. We had a major program that we started in breast cancer and there are other cancers that are all interested to us. So yes, certainly, this program is continuing.

Thank you very much. Unfortunately, time has come to an end. So this would conclude a Q&A session with the media. Thank you very much for your participation today.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Thank you for waiting, everybody. We'll now start Daiichi Sankyo's ESMO 2025 highlights. This is Ken Asakura from Corporate Communications, and I will be the moderator today. First, about the language for this event.

Presentation will be in English, and Q&A will be in both English and Japanese. Simultaneous interpretation is provided, so please click the interpretation icon at the bottom of the screen and select either English, Japanese or original audio. When original audio is selected, you will hear the original sound.

English presentation slides will be shown on the Zoom screen, as well as live streaming screen. The slides have been uploaded to IR presentation material page of Investors section on our corporate website, so please view or download as needed.

Our presenters for today are Dr. Ken Takeshita, our Head of Global R&D; and Dr. Abderrahmane Laadem, our Head of Late-Stage Clinical Development. We'll take questions after the presentation. And please note that this event will be recorded.

With that, let's start the event. Ken, please.

Okay. Ken Asakura-san, thank you very much for that introduction. And it's a distinct pleasure for me to give you the ESMO highlights Investor Relations meeting presentations.

Next slide, please. So let me just first tell all of you that this slide is the -- all the presentations that we made at this current ESMO meeting. It's an enormous number of data presentations and including at least 3 or 4 registration trials, pivotal trials that can be submitted to various regulatory agencies.

The 3 Phase III studies, DESTINY-Breast05 -- 11, TROPION-Breast02 and REJOICE-01. So these are incredibly important to all of us to patients, the company and of course, to the investors. And so -- we're very excited. And I got to say that for me, this is probably our best list of presentations at a major cancer conference for Daiichi Sankyo. So thank you very much to all the people here at the Daiichi Sankyo and patients who participated in our trials, as well as our partners, AstraZeneca and Merck.

So -- and we're going to go through all the details of the data, but let's just go on to the next slide, just to give you some big picture of where we stand. So I think many of you are familiar with this disease map. This one is for breast cancer. It divides the breast cancer field into multiple lines of therapy from neoadjuvant all the way to second line and later.

And of course, also by subtypes of breast cancer, HER2-positive, triple-negative breast cancer, et cetera, on the left. The colors indicate the assets that we have in clinical trials and the boxes that are filled in represent approvals that we have already obtained specifically in U.S. and other major countries.

So for today, I'll tell you that DESTINY-Breast09, that is a submission that is in progress at the moment at the FDA and other regulatory agencies, DESTINY-Breast05 and 011. These are the new data that was presented at ESMO. So I hope you understand that these orange color boxes that are in lighter orange will soon become dark orange boxes.

In addition, on the triple-negative breast cancer, TROPION-Breast02. This is a data that we're going to be presenting later today in this session. And hopefully, this will also turn into a dark blue box in the near future.

Next slide. I do want to some -- want to mention that we have additional clinical trials going on in lung cancer. We did not report any positive Phase III data in these diseases. But of course, we are certainly very much interested in doing these lung cancer trials.

Next slide. Okay. In the field of GYN cancers, so REJOICE-Ovarian01. This is the data that we will also be discussing later at this session, some preliminary data on R-DXd in ovarian cancer.

And hopefully, this purple box will also turn -- soon turned into a dark purple box at some point in the future.

Next slide. Okay. So with this, I'm going to ask Dr. Abderrahmane Laadem to give us some details of the clinical data that was shown at this ESMO meeting.

Thank you, Ken, and excited to be here. Hello, everybody. My name is Abderrahmane Laadem, I'm the Head of Oncology Late development at Daiichi Sankyo.

Today, I would like to highlight 6 different topics related to the DS assets from the 2025 ESMO conference, 4 in breast cancer, covering ENHERTU in early breast cancer and Dato-DXd in triple-negative breast cancer. Another presentation, the fifth one is related to R-DXd in ovarian cancer. And the last not least, the first clinical data from our first in-human about DS-3939.

Next slide. The first presentation is about DESTINY-Breast11 of ENHERTU in the neoadjuvant setting in high-risk HER2-positive early breast cancer. This was presented by Dr. Harbeck at the Presidential Symposium I.

Next slide. DESTINY-Breast11 is a global multicenter open-label Phase III randomized high-risk patients, HER2-positive early breast cancers defined as having large tumors or lymph node positive or inflammatory breast cancer. The trial randomized more than 900 patients in 3 arms, T-DXd followed by THP versus dose-dense AC followed by THP and T-DXd monotherapy.

The T-DXd monotherapy was closed following DMC recommendation for various reasons, but not due to safety. The primary endpoint was pathological complete response assessed by a blinded central review.

Next slide. Here are the demographics. They were overall well balanced, and most patients were randomized from Asia. Tumor stage, large tumor represented near half of the population and nodal status, or lymph node positive represented near 90% of the patients.

Next slide. The trial reached its primary endpoint with statistically significant and clinically meaningful improvement of pathological complete response in ENHERTU followed by THP regimen, over dose-dense AC followed by THP with an absolute rate of pCR of 67.3% and an absolute delta of 11.2% with a p-value 0.003. The improvement was also observed in both hormone receptor negative and hormone receptor positive.

Next slide. The improvement in pathological complete response for T-DXd followed by THP versus control was observed across both pre-specific subgroups. We go to the next slide. An early positive trend in EFS was observed also favoring T-DXd followed by THP arm with a Hazard ratio of 0.56, but the EFS maturity is too early.

Next slide. The overall safety profile of T-DXd followed by THP arm was favorable versus control arm. With reduced rate of severe Grade 3 and serious adverse event or treatment continuation or left ventricular dysfunction as shown here in the table over the control arm.

Next slide. T-DXd followed by THP had fewer any grade and Grade 3 adverse event. Hematological toxicity and fatigue events less than in the control arm. Aside from nausea, GI toxicity was comparable between the 2 arms.

Next slide. In conclusion, DESTINY-Breast11 results support T-DXd followed by THP as a more effective and less toxic neoadjuvant treatment compared with dose-dense AC followed by THP. And may become the preferred regimen for patients with high-risk HER2-positive early breast cancer.

Next slide. Moving now to the second study, which was also presented as Presidential Session Symposium I by Dr. Geyer. Here, T-DXd was compared as a single agent to T-DM1, another HER2-directed ADC in the post neoadjuvant setting in high-risk HER2 early breast cancer patients.

Next slide. DESTINY-Breast05 is also a global multicenter open-label Phase III, randomized high-risk patients with residual disease in the breast after a neoadjuvant chemotherapy. The trial randomized 1,600 patients on [ 1:1 ] to receive 14 cycles of either T-DXd or T-DM1. The primary endpoint of the study is invasive disease-free interval or IDFS.

Next slide. Patients and disease characteristic here 46-plus percent of the patients were randomized from Asia, majority are HER2, 3+ and hormone receptor positive. The nodal pathological status was positive in 80% of the patients. Prior neoadjuvant treatment included mainly taxane, and anti-HER2 treatment almost in all patients. And anthracycline or platinum was received 50% and 50% among these 2 drugs.

Next slide. DESTINY-Breast05 met its primary endpoint of IDFS, which was statistically significant and clinically meaningful with a hazard ratio of 0.47 and p-value of 0.001, reducing the risk of relapse by more than 50% in this post-neoadjuvant high-risk population. At 3 years, 92.4% of the patients are alive with no sign of disease.

Next slide. Improvement of IDFS for T-DXd arm versus T-DM1 what was observed in all prespecified subgroups.

Next slide. DFS was a secondary endpoint. It was also statistically significant and clinically meaningful with a hazard ratio of 0.47 and p-value 0.001, reducing the risk of relapse by more than 53%.

Next slide. Distant disease recurrence-free interval and brain mets free interval was also clinically relevant here. A 3 year follow-up, 81 patients in T-DM1 had distant relapse versus 42 patients in T-DXd.

Next slide. In this study, Grade 3 adverse events were similar between treatment arms. Rate of ILD was around 10%, and majority of these cases were low grades. More deaths due to adverse events were reported in T-DM1 arm 5 versus 3.

Next slide. T-DXd was well tolerated and managed with no new safety findings. Next slide. ILD occurred with expected rate, and the majority were low grade, and 2 patients died due to ILD in the T-DXd arm.

Next slide. In conclusion, post neoadjuvant T-DXd demonstrated superior clinical benefit over T-DM1 in patients with HER2-positive early breast cancer with residual disease after neoadjuvant treatment. These results present a potential new standard of care in this population post neoadjuvant setting.

Next slide. Let's go to the third landmark study now. We're moving from early breast cancer in metastatic triple-negative breast cancer. And now we're talking about Dato-DXd. And the first study here or third study is TROPION-Breast02, what -- which we showed at ESMO '25. It was presented by Dr. Dent at an oral session and here, Dato was tested against standard chemotherapy in the first-line triple-negative breast cancer.

Next slide. TROPION-Breast02 is a global multicenter open-label Phase III, randomized first-line metastatic triple-negative breast cancer with no prior chemotherapy for locally recurrent or metastatic disease for whom immunotherapy is not an option.

Here, it's important to note. The trial did not set any minimum time frame from the prior adjuvant to recurrence of the disease. For patients to be eligible in this study. It's expressed here by in the last key eligibility criteria on the table here by DFI, disease-free interval.

The trial randomized 644 patients to receive either Dato-DXd or chemotherapy. The primary endpoint was a dual endpoint of overall survival and progression-free survival.

Next slide. Regarding demographics in TB02 and patient characteristics, overall well balanced and consistent with first-line triple-negative population. PD-L1 status was low, which in the majority of the patients. And the preselected chemotherapy for the control arm was mainly taxanes.

It's important to note as well here, as I mentioned in the prior slide, but the prior disease-free interval between 0 and 6 months, those patients are fast progressors. This population represent in TROPION-Breast02, 15% in this study.

Next slide. The trial met its primary endpoint of PFS, Dato-DXd demonstrated statistically significant and clinically meaningful improvement of PFS compared to control chemotherapy. With a hazard ratio of 0.57 and p-value less than 0.001 with the reduction of risk of progression or death by 43%.

Next slide. The improvement in progression-free survival for Dato-DXd versus control was observed across all prespecified subgroups.

Next slide. The trial met also its dual OS primary endpoint. And Dato-DXd demonstrated a statistically significant and clinically meaningful improvement of overall survival compared to chemotherapy, reducing the risk of death by 21%.

Next slide. The improvement in overall survival for Dato-DXd versus control was observed overall across all subgroups.

Next slide. Other efficacy secondary endpoints are presented here as well, showing that Dato-DXd doubled the response rate as shown from 29.3% in the chemotherapy to 62.5% in the Dato-DXd arm. Important to note here that the rate of complete response with Dato-DXd is more than three times compared to chemotherapy -- compared to the complete response number in chemotherapy in favor of the Dato-DXd.

Next slide. In addition to the doubling of this response rate, these responses were longer in the Dato-DXd arm over a year.

Next slide. Regarding safety, duration of treatment was longer in the Dato-DXd more than double compared to the duration of treatment in control arm. And despite that, the rate of severe grade, Grade 3 and more adverse event and serious adverse events were similar, and treatment discontinuation was lower in the Dato-DXd. I'd like to note here there were no death due to adverse event in either arm.

Next slide. Most frequent adverse event related were mainly stomatitis and nausea and ocular toxicities. Fewer severe grades for Dato-DXd observed in these categories. Hematological toxicities were more frequent in the chemotherapy arm, including severe grade of neutropenia.

Regarding the adverse event of interest, higher rate of mucositis and ocular toxicity occurred in the Dato-DXd. Severe grade were less than 10%. And it's important to note that none of the mucositis events led to treatment discontinuation. And ocular toxicity led to treatment discontinuation in less than 1% of the patients.

Low rate of ILD observed overall in Dato-DXd here, less than 1% of the patients -- low rate of ILD observed overall in Dato and less than 1% of the patients experienced a severe grade and no grade 5 were reported here.

Next slide. In conclusion, TROPION-Breast02 results with a positive overall survival and progression-free survival with a manageable safety profile support Dato-DXd as the new first-line standard of care for first-line metastatic triple negative breast cancer for whom immunotherapy is not an option.

We're going to talk now about the fourth study which is the second study in triple-negative breast cancer with Dato-DXd. And this time, Dato-DXd is combined with immunotherapy, durvalumab in the first-line treatment for triple-negative breast cancer.

Next slide. The study called BEGONIA is a Phase I/II multicenter and multi-arm showing here Arm 7 and Arm 8 parts. A combination of Dato-DXd and durvalumab in the first-line triple-negative patient for whom, no IO or Topo I was received. Arm 8 enrolled patients with PD-L1 high. However, Arm 7 enrolled patients with any expression of PD-L1. The primary endpoint of Part 2 of these 2 arms was response rate.

Next slide. Here are the results for the Arm 7. Arm 7 are the patients with ED -- PD-L1 expression. But the majority of these patients were actually PD-1 low. The study enrolled 62 patients, and the response rate was high, near 80%, and the median of response in this population with this combination was 17.6 months and PFS was 14 months.

In Arm 8, where the patients have high PD-L1 expression. We enrolled 33 patients, and the response rate was also high, 81.8% and the median duration of response and PFS were immature at this stage.

Overall -- next slide, overall, the safety profile of this combination was manageable with no new safety seen here.

Next slide. Across both arms, most adverse events were GI in nature, like nausea and stomatitis and rate of ILD was low with no severe grades.

Next slide, in conclusion, the combination of Dato-DXd and durvalumab demonstrated robust antitumor activity in the first-line triple-negative breast cancer in both PD-L1 high and with any PD-L1 expression.

Next slide. Let's move now to R-DXd in ovarian cancer. In previous highlights, we shared encouraging data results from our Phase I/II in ovarian cancer with this drug. Just to remind, R-DXd is a cadherin 6 directed ADC with similar payload and linker like an ENHERTU, belonging to the same DXd platform and technology. This time, we'll highlight results from the Phase II part of the Phase II/III registration study called REJOICE-01, done in platinum-resistant ovarian cancer patients. This Phase II is a dose optimization in platinum resistant ovarian cancer patient.

Next slide. We'll focus here on the middle box basically on the Phase II part for the dose optimization where patients were randomized, patients who are platinum-resistant ovarian cancer to receive 3 dose level of R-DXd. So patients were randomized to receive from low dose, 4.8-milligram kilo than 5.6 milligram kilo and the highest dose 6.4-milligram kilo. This is like a randomization happening concomitantly. The primary endpoint of this dose optimization was ORR by an independent by BICR.

Next slide. Across the 3 dose level arms, 107 patients were enrolled, mainly in Asia and Europe, and the median age was 6 years old. As shown here, these patients are heavily pretreated. And more than 50% of the patients received 3 prior lines of systemic therapy. Rapid progressors post platinum patients who progress within 3 months from last platinum represent 44% in this population. And 94% of these patients have some CDH6 positivity.

For the results, R-DXd as monotherapy demonstrated promising antitumor activity at all those levels. Response rate for the 3 dose levels of 4.8, 5.6 and 6.4 milligram per kilo were 44%, 50% and 57% respectively. The disease control rate was above 75% across all those levels. And the median time when this patient obtained this response was about 7 weeks.

Next slide. As shown here in the waterfalls, dramatic responses observed. Majority of patients, 50% of them responded per BICR, but many other patients have significant tumor shrinkage, which account for the stable disease. Next slide. As you see here in the spider plots, the treatment with I-DXd was associated with rapid response at all those levels. So the follow-up for the study was short, less than 6 months at the time of cutoff date, more than 50% are still receiving treatment.

Next slide. The safety profile of 4.8 and 5.6 milligram dose levels were relatively similar. And the treatment-related adverse events occurred more frequently with a higher dose of 6.4 milligram per kilo. The ILD rate was very low with R-DXd less than 3% in doses 4.8 and 5.6 and no Grade 5 reported here.

R-DXd with 5.4 milligram provided the optimal benefit risk. In fact, we are selecting this dose level to continue the study, the Phase III part.

Next slide. Okay. In terms of safety, nausea, anemia and asthenia and neutropenia were the most common adverse event. Overall, the treatment was -- the safety profile was acceptable.

In conclusion, next slide. R-DXd demonstrated clinically meaningful responses across a range of CDH6 expression and dose levels. Phase III part of REJOICE-Ovarian01 will evaluate R-DXd 5.6 milligram versus physician's choice in the PROC population in the Phase III part.

Okay. Here, last not least, presentation to highlight the DS-3939 asset. This is the first time Daiichi-Sankyo is sharing clinical data from the ongoing first-in-human study. DS-3939 shares also the same payload and linker of the DXd platform like ENHERTU. It's a DAR 8, the target is tumor-associated MUC1, which is this target is expressed broadly in various tumor types.

Nonclinical work, nonclinical data has exhibited significant antitumor effect in multiple TA-MUC1 preclinical models.

Next slide. The design of the first-in-human is a classical dose escalation Part 1, followed by multiple expansion Part 2 targeting various tumor types. The primary endpoint of Part 1 is mainly safety, looking at DLTs and recommended dose. And for Part 2 is overall response rate. We're showing here results from the dose escalation Part 1 of the study.

Next slide. A total of 64 patients enrolled and treated by DS-3939, the treatment was given IV every 3 weeks. And we started with very low dose 1-milligram per kilo up to 8-milligram per kilo. Various solid tumors included, as you know, as often in first-in-human, those patients are Phase I patients heavily pretreated, as expected in these trials.

Next slide. The dose level of 8 milligrams was associated with high toxicity, and this dose level was dropped. The dose-limiting toxicities were mainly anemia and thrombocytopenia, or platelet decrease and abdominal pain. And dose level of 6-milligram was considered potentially a recommended dose. That's why we carry this dose to test this dose in various different cohorts in Part 2. And the treatment discontinuation was primarily due to ILD and pneumonitis.

Next slide. Regarding safety profile, GI or gastrointestinal toxicity, hematological toxicity and fatigue were the most common Grade 3 or higher. Grade 3 or higher AE were hematological toxicities and pneumonitis or ILD.

Next slide, ILD rate occurred around 10.9%. And the median time for ILD occurrence was around 68 days. And the -- at the post cutoff of this data, we were informed about 2 deaths due to ILD were adjudicated. Both patients who died due to ILD were from a higher dose, 8-milligram per kilo. No Grade 3 of immune-related reaction observed while we observed some IRR due mainly to the absence of premedication because of the rules of Phase I trial, the no premedication at Cycle 1.

Next slide. Those are early signs of efficacy. Despite a Phase I population, encouraging antitumor activity, either responses were RECIST, or tumor reductions were observed across multiple tumor types here as shown in this graph.

And next slide, and duration of this response is yet to mature, but preliminary observation of some durable responses is noted here as shown.

In conclusion, preliminary data from the novel TA-MUC1 DS-3939 DXd first-in-human show manageable safety profile in previously treated advanced/metastatic solid tumor. DS-3939 demonstrated promising preliminary antitumor activity across dose levels and tumor types. Those expansion and optimization are ongoing with various tumor types.

With this, I will end my presentation here, and we invite the Q&A session. Thank you.

Thank you, Abder. We'll now take questions. You could your questions in English or in Japanese. [Operator Instructions] The first question is from Yamaguchi-san from Citi.

Can you hear me?

Yes.

The first question is regarding -- regarding the all the data you have presented, there are so many data has been presented and especially the late-stage Phase III data are practice changing. But in order for investors to digest what's going on, it's a little bit difficult to swallow because there are so many things that happen at the same time.

So if it's okay, Ken, can you give me out of those, especially 3, 4 pivotal datas, which one do you think is really so-called practice changing compared to the current therapy? Can you pick up 1 or 2, which out of those -- all those things? It's just your personal impression. That's the first question.

Yes. Thank you for the question. And you are right, it's a lot here to digest. So what is considered practice changing probably are those 3 landmark studies, mainly the first 2, the first 2 studies of ENHERTU in early breast cancer. So what we're seeing here, ENHERTU, after extending the life of patients in late line of breast cancer HER2-positive, increasing their survival, increasing the PFS in first line.

We're talking now about increasing the potential of cure of these patients. So in early breast cancer, the treatment, today treatment is good. It's very hard to do better, but ENHERTU push the boundaries and increase again this potential rate of cure by a delta of 11%, which is considered clinically meaningful and statistically significant.

Okay. The second question is that regarding DS-3939, which you gave us some preliminary data. And clearly, just look at the data, it looks like ovarian cancer and lung cancer seems to be have a more sort of response so far. But can you give me some idea where you're going to go from here?

As far as the cancer selection is concerned because my understanding that this is the so-called first Daiichi Sankyo 100% owned asset in a sense that you can choose whatever you want to. But at the same time, you have to be careful about the current therapy or current alliance you have already. So can you give me the idea where you're going to go for the pickup the selection of cancer for 2 years ago?

Yes. So yes, I think you're referring to the fact that we have so many DXd-ADCs that there's a potential for overlap in indications in patient populations. I think in ovarian cancer, as you know, we already have a very active program with the R-DXd program. And in lung cancer, we have a very active program with ENHERTU and the Dato program. So what we are doing now here is to understand whether or not there are any potential overlaps or lack of overlap to the patient populations that are responsive to the 3939 drugs versus these other competing DXd-ADCs that we have in our own pipeline.

That's really our #1 goal here. And we can do this now with the advent of various molecular and biomarker technologies that we have in-house. And I do want to mention that especially lung cancer, based on what we know about HER2 -- ENHERTU and also the data program, which are really the more the later-stage pipeline drugs approved or about to be approved in various lung cancer patient populations. We do think that there are still a lot of opportunities in lung cancer.

So you're kind of hinting so far, there might be some chance -- more chance maybe in lung cancer rather than any other areas because it's such a big area to talk with.

That is correct as -- that is our thinking. R-DXd ovarian cancer, it's -- you look at our data so far and in all-comers patient population, the response rate is quite high. And so I think you're correct that lung cancer might be the greater opportunity for 3939.

The next question is from Mamegano-san from BOfA.

[Interpreted] Thank you very much for your presentation with the great data. Congratulations. So these are data revolutionizing the existing SoCs. My question is about DB11, neoadjuvant test. So data is great. So survival [ OSS ] data is the data I personally would like to see more. Clinical doctors would be more interested in survival data. And some physicians find it difficult to utilize it for the neoadjuvant therapy in practice. So are there any possibility that you conducted the neoadjuvant related test? Or is this the neoadjuvant follow-up data would it be good enough?

Okay. Thank you for the question. To your question, yes, we are following this population for clinical endpoints, EFS and overall survival in the future. However, the pathological complete response is a standard endpoint in this population of neoadjuvant. It's -- let's put this pathological complete response in the context of the study and the population. We're not talking about all breast cancer here. We're talking about a proportion of breast cancer with a high risk of relapse and increasing pathological complete response in this specific context is a very good surrogate marker for the clinical outcome like EFS and survival in the future.

This has been demonstrated in many meta-analyses, and we have confidence that ENHERTU with the highest rate ever observed in this population is extremely positive.

[Interpreted] Sorry, maybe I should change my question in a different perspective. According to the [indiscernible] trial, there is a neoadjuvant-based study. There was -- and afterwards, there was affinity test to evaluate the survival rate with adjuvant. And afterwards, in practice, the medication was utilized more ENHERTU. There was a great data in neoadjuvant. And I understood that.

However, after that, OSS should be one or more solid to evaluate it. What would you think about this evaluation of OSS?

Okay. So I just want to make sure we understand the question. The question refers to DB11, is that correct?

[Interpreted] Yes.

And you are asking about overall survival data, correct?

[Interpreted] Yes.

Okay. So I just to make sure to -- for all of us to understand it, in a DB11 trial, it's going to be a long time before we actually see definitive over survival data at that planned maturity. But -- so -- but in DB11, what we can say right now is that a surrogate for overall survival are things like pathological CR and event-free survival.

And right now, we are seeing very statistically significant and clinically meaningful difference in pathological CR. Now and EFS is early, but we are seeing an early trend in EFS with a hazard ratio of 0.56. Now we -- it's a very immature data for, I think, at the level of about 5% information, but -- so when we look at surrogate endpoints for overall survival, all the indicators, pathologic CR and event-free survival are both pointing in the right direction.

But ultimately, we have to wait quite a while before we see some overall survival data.

[Interpreted] Thank you very much. So OSS, surrogate marker for that the pCR has been applied. So with the data from that test for the neoadjuvant, the patient, it's probable to win the approval not the entire adjuvant therapy, but for that particular patient group, ENHERTU will be leading the therapy option. So am I understanding saying that, my understanding correct?

Okay. So of course, we're not the FDA, and it's the FDA that makes the ultimate decision about whether or not to approve the data set based on the data set of DB11. However, we do believe that this package of 2 trials, DB11 and DB05 represents both a very strong package for approvability at the FDA for both DB11 patient populations, that's the neoadjuvant patient population and DB05, the post neoadjuvant patient population, both of them.

[Interpreted] So this data, I also understand that the data is great. The DB05 test that this is only for the non-pCR patients. So the open-label patients would be if ENHERTU should be applied for the initial open-label patients, you needed to conduct a test of the mixture of the adjuvant. Do you have such a plan to conduct such a study in future?

Let me clarify the population of DB05. DB05 is applied ENHERTU was given to patients who already went through neoadjuvant and surgery. However, these patients who included in DB05 did not achieve pathological complete response. That's why, they're required to be -- required to receive more treatment.

And if you take the 2 populations, the 2 studies together are basically complementary. The DB05 has a strong and meaningful clinical endpoint, which is IDFS, and which is statistically significant and clinically relevant.

The next question is from Hashiguchi-san from Daiwa Securities.

[Interpreted] This is Hashiguchi speaking. My question is about the R-DXd, and I'd like to understand more about the study design. Page 52 says that the Phase II have a 260-patient sample size. And as you just introduced those optimizing analysis, it has 108 cases. So there is the difference of the 150. So is this because of the dose expansion part involved if it is the case? Phase II part data should be the basis for the applications of the accelerated approval, is there any possibility for the applications of accelerated approval?

And also, I'd like to understand about the current stage of the enrollment, so is it at the Phase II part expansion part? Or are you already entering into the Phase III part?

Yes. Thank you for the question. Yes, in fact, the Phase II overall the total of 260 patients, but we're presenting here a pure dose optimization from a randomized population at this cutoff. And the -- as you see here, the size of this Phase II, now we are defining the dose. We're extending one of the arms, the 5.6 milligram to enroll more patients, more than 100 patients. And yes, as you know, also we get the breakthrough therapy from FDA last several weeks. And discussion with health authorities is underway. And the Phase III is starting very soon because now we have the recommended dose to apply to apply this dose in the Phase III part.

[Interpreted] So Phase II part have enrolled 260 patients, and 150 patients have received 5.6 milligrams. Is that what you mentioned?

Not yet. We're extending this arm to enroll more patients on it.

[Interpreted] So Phase II part, so do you have any plan or estimate when you get that data to be available for that Phase II part?

Yes, this data that -- we'll announce when we get this data, this will be announced in a future time.

The next question is from Wakao-san from JPMorgan.

Thank you for taking my question. This is Wakao from JPMorgan. I have 2 questions. Firstly, about R-DXd and maybe overlap question from [Technical Difficulty]. So can I understand that you will submit for approval with -- regarding R-DXd with this Phase II data? Is it correct?

And so at ESMO, there was a comment that the PFS data from Phase II trial will be presented in the near future, when we can expect those PFS results to be released? And with the PFS data from the Phase II part be -- Phase II part be sufficient to trigger an accelerate approval for application?

So the -- I hope you can understand that the way the study is designed, it is designed to have a primary endpoint of response rate as the efficacy endpoint. And so this is your classic way to achieve accelerated approval in the U.S. and maybe certain other countries.

So yes, additional data like progression-free survival or event-free survival will be part of the package. But for accelerated approval purposes, response rate will be the -- and duration response are the important endpoints. And as we explained earlier, we will be able to announce that approach at some point in the future, hopefully near future.

So you got a second question about TROPION-Breast02. So overall data was very strong. Regarding the subgroup analysis so TB02, I'd like to understand why the hazard ratio for OS among U.S., Canada, Europe exceeded, [Technical Difficulty] it was mentioned that post treatment may have had an impact. I'd like to know more detail for this one. Could this data negatively impact market penetration in Western market [Technical Difficulty] launched?

Okay. Well, so we're starting to talk about various subgroup analyses and the numbers get smaller and smaller. So it's very important to note that we're no longer talking about very statistically meaningful differences, but we do have some information for you, especially in light of -- I think you're concerned about the crossovers and who got what at the time of crossover.

Yes. Thank you. Very important question. While TROPION-Breast02 did not allow crossover, we have data, but 30% of this patient in the control arm, get an ADC. This ADC could be TRODELVY, it could be ENHERTU, it could be other thing, something active in triple-negative breast cancer. And if we compare this rate to TRODELVY study, in the TRODELVY study about 50% of the control arm crossover to TRODELVY. So the rate between 30 and 50 is not so far.

But here, we're showing a strong overall survival and PFS ever shown. And we feel confident about the overall efficacy data of DATROWAY in triple-negative breast cancer from both perspective, efficacy and also safety profile.

The next question is from Muraoka-san from Morgan Stanley.

[Interpreted] Muraoka from Morgan Stanley. Sorry to repeat the similar questions again, but R-DXd regulatory filing is my question. So how can I put the question here? Well, next year, April, fourth quarter -- before the fourth quarter's financial earning announcement. Are we going to hear your news that you have made accelerated approval filings to be done for R-Xd? Or is it too early to say that?

Okay. I think that we have not made any announcements so far. So please I'll call it off until our next update to all of you about when to expect such a submission to the FDA. I'm sorry about this, but that's about as much as we can say for today.

[Interpreted] Understood. Looking forward to the next update, maybe third quarter update, I believe. And the second question from me. It's not directly related to today's presentation, but I have received a question from the non-Japanese analysts or investors. At this ESMO, the third TROP-02 [indiscernible], although it is Chinese population only study, but the EGFR-mutated, [indiscernible] [ TNSC ] late line had made very good data. And regarding this, competitive landscape for Dato, how do you interpret that data?

Yes. So I think you're referring to the data from China, and it is, as you know, a very good data in Chinese patient populations. How does that translate into a broader applicability to non-Chinese patients. It is a little unclear. As you know, we do have our own clinical trial in that same patient population as a randomized study. And so at some point, we hope to be able to look at our study data and compared to how it compares to these other TROP-02 targeting drugs.

The next question is from Matsubara-san from Nomura Securities.

[Interpreted] This is Matsubara speaking from Norman Securities.

Can you hear me? Congratulations for your great data. First question is Dato-DXd and for the TP02 test -- TB02, under [indiscernible], the -- there was an effect that from the combination with the inhibitor. Of course, the cancer type is different. But for AVANZAR trial, do you have more confidence now with the situation on -- in the AVANZAR test or trial?

Okay. So I just want to make sure I understand the question. Are you asking about our AVANZAR trial thinking or something related to TB02?

[Interpreted] I'd like to know more about AVANZAR first line. And there would be the combined the use with the [Technical Difficulty]. So Breast02, the better data was out. So do you have more confidence now in the outlook for AVANZAR test?

Okay. So I understand the question to be that based on TB02 data, do we have more confidence in the AVANZAR trial? Is that correct?

[Interpreted] Yes.

Okay. Well, so I think, of course, in general, we are very happy to see our Dato program succeed in breast cancer. That's very important. How does that translate into applicability to a completely different cancer, lung cancer. I think from a -- of course, it does help somewhat to show that there is a lot of activity of the Dato program, the Dato drug in breast cancer, but -- and we can look at also the toxicity profile and see that it's a management profile.

So does it improve our chances of AVANZAR being positive, I would say, probably, yes, to some extent. But a lot of the information that we have gleaned from Dato in TB02. I think that most of us, all of us, at least from Daiichi Sankyo were aware.

And so that -- I don't know that it increases our thinking about AVANZAR, but possibly, from your side, I think it is reassuring that TB02 is positive with a very good safety profile and tolerability and that should translate into greater confidence for AVANZAR.

[Interpreted] Next is DS-3939. Yamaguchi-san had a question, the -- you would be focusing on NSCLC, but the conclusion, the -- it was stated that the various cancer types would be evaluated. So which is correct? Right now, you focused on the various types of the cancer type, but for the time being, you are focusing on NSCLC. Am I understanding right?

No, it's -- lung cancer is just one of the many different possible future development paths for 3939. The TA-MUC1 antigen is expressed in many different types of cancers besides lung cancer. So yes, we're very much interested in looking at a survey of a range of potential activities of this drug in many different cancers. I think -- but it's hard to ignore lung cancer data because that was actually presented at the conference here at ESMO.

The next question is from Tony Ren-san from Macquarie.

Thank you for the opportunity. Can you guys hear me?

Yes.

Okay. Perfect. Yes. So first of all, congratulations. I mean, you guys are definitely the big winner at ESMO in Berlin this year. Two questions from me on DESTINY-Breast11 study.

Again, on a subgroup analysis, if you go to Slide #15, right, when you look at the pCR rates. It appears to me that the pCR rates in the rest of the world appears to favor dose-dense AC followed by THP and the footnote says that these countries are Brazil, Bulgaria, Peru, Poland, Russia and Saudi Arabia. Just wanted to understand why the control arm appears to do so much better in these countries compared to the rest.

So it's -- I think it's a little premature to say that the control arm performed better in that rest of the world group. It's a very small number of patients. And you can see on that slide that the confidence interval is quite wide, and it goes into the DXd THP portion of that slide. And so it's a little premature to say that control arm did better. I think we just have to do more analysis to understand why we are seeing the data that we're seeing.

Understood. Yes, the number is quite small. My second question is also on DB11. It's about the eligible patient population. So in Berlin, I spoke to a number of KOLs as well, including the discussions and the presenters. Some of them said that very few patients they see actually fit the DB15 enrollment criteria, right? Because in the west, there's very extensive screening of breast cancer. So most of the patients they see in the neoadjuvant setting are not that sick.

That being said, last night at the AstraZeneca event, they had a slide showing that they think 80% of the patients in the neoadjuvant setting before surgery will be higher risk. So obviously, I'm having difficulty to reconcile these 2 statements. Anything that you can help me understand this situation better?