Takeda Pharmaceutical Company Limited American Depositary Shares (each representing 1/2 of a share of Common Stock) 2027 Q2 Earnings Call

Thank you so much for joining us today for Takeda's 2026 Q2 earnings announcement, despite your busy schedule. My name is O'Reilly, Head of IR. I will be serving as the MC today. Thank you for this opportunity. I would like to explain about the language setting first. Please find the language selection button at the bottom of your Zoom window. If you wish to listen to Japanese, please select Japanese. If English, please select English. If you want to listen to the original voice, please turn it off.

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Before starting, I would like to remind everyone that we will be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause our actual results to differ materially are discussed in our most recent Form 20-F and in our other SEC filings. Please also refer to the important notice on page 2 of the presentation regarding forward-looking statements and our non-IFRS finance measures, which will also be discussed during this call. Definitions of our non-IFRS measures and reconciliations with the comparable IFRS financial measures are included in the appendix to the presentation. Now, we would like to start today's presentation. We will hear from President and CEO, Julie Kim, Chief Financial Officer, Milano Furuta, and R&D President, Andy Plump. This will be followed by a Q&A session. Now we will get started.

Julie, please go ahead. Thank you, Chris, and thank you all for joining us today for Takeda's second quarter earnings call for fiscal year 2026.

Our goal is to deliver meaningful impact for patients and lasting value for our shareholders. In the first half of this fiscal year, I am proud of what we've accomplished towards achieving that. We'll continue delivering impact and value by leading in our therapeutic areas, building portfolio depth through science, innovation, and speed from discovery to access. Our generational promise to boldly reinvent for a healthier world remains at the heart of everything we do. I want to thank our colleagues, as well as the patients, families, and healthcare professionals who make this progress possible. Starting with slide 5, our fiscal 2026 first-half results demonstrate strong execution across our priorities. Let me walk you through the numbers.

In the first half, core revenue was just over JPY 2.4 trillion, a decrease of 1% at constant exchange rate or CER. This reflects the resilience of our core in-line brands and headwinds in our mature and off-patent portfolio that are not yet fully offset by our recent launches. Core operating profit was JPY 710.6 billion, an increase of 0.7% at CER. Core EPS was JPY 308, a decrease of 1.2% at CER. As we outlined in May, core operating profit reflects the investment we're making to support our new launches and our late-stage pipeline. We're largely offsetting those investments with the savings our transformation program is delivering. Overall, our first-half results demonstrate that we are on track against our FY 2026 priorities, and we will continue our disciplined execution to deliver on our revised full-year forecast and management guidance.

The right side of the slide highlights our pipeline and portfolio progress since last earnings. Our first priority in Horizon One is to execute successful new product launches. We are pleased that ORZEYFUL launched in Japan and China this month for the treatment of narcolepsy type 1, and we expect to launch in the U.S. in early November following the completion of DEA scheduling. We also launched MIMRYLO in the U.S. in August, a first-in-class new treatment for patients with polycythemia vera. In addition, we secured approval for ELAHERE, which we're commercializing only in Japan for folate receptor alpha-positive platinum-resistant recurrent ovarian cancer. We also made progress with regulatory submissions, reflecting our continued momentum to bring new medicines to patients. The FDA accepted our new drug application for zasocitinib in psoriasis under priority review, and the EMA accepted our marketing authorization application.

We also filed TAK-881, our 20% hyaluronidase-facilitated subcutaneous immunoglobulin program in the U.S. for primary immunodeficiency. Our second priority this year is to advance our late-stage pipeline, where we have made significant progress across other late-stage programs. At the European Society for Medical Oncology Congress last week, we shared positive results from our phase III study of TAK-921 in previously treated advanced gastric cancer. The study met its dual primary endpoints of overall survival and progression-free survival while demonstrating a manageable safety profile. These findings will support our planned regulatory filing in Japan, which we intend to submit during fiscal year 2027. In addition, we've initiated a phase III study of elritercept in myelofibrosis. We also remain committed to supporting our core in-line brands, which continue to deliver value for patients and underpin our performance.

To this end, we presented positive results from the VERDICT Study, adding to the strong body of evidence for ENTYVIO in ulcerative colitis. The study generated compelling evidence that ENTYVIO can achieve deep remission and meaningfully reduce the risk of UC-related complications with sustained benefits over time. Andy will dive deeper into this ENTYVIO study and our pipeline developments later in the call. Lastly, our transformation is progressing well as we continue to strengthen our capabilities and drive efficiencies across the organization. As these initiatives gain traction, the realized savings are funding new launches and late-stage pipeline while protecting core operating profits. Beyond these financial benefits, our transformation is building the agility we need to support Takeda's next phase of growth. Milano will walk through our savings progress later and how we are reinvesting for accelerated growth.

Let me now turn to ORZEYFUL and how excited we are about this new class of medicine. ORZEYFUL is a first-in-class oral orexin receptor 2 agonist for the treatment of narcolepsy type 1 or NT1. Unlike treatments that focus on individual symptoms, it is designed to address the underlying orexin deficiency. We believe it has the potential to redefine the standard of care by delivering transformative efficacy across a broad range of NT1 symptoms. NT1 diagnosis is a challenge. The diagnosis rate ranges from less than 10% in China to roughly 40% and 50% in Japan and the U.S. respectively. In the U.S., more than half of patients diagnosed with NT1 continue to experience symptoms despite switching treatments or taking multiple medications. In all markets, we will first focus on individuals who have already been diagnosed.

At the time of our last call, ORZEYFUL had just been approved in China, and since then, it has also been approved in the U.S. and Japan, all within about 1 month. ORZEYFUL launched simultaneously in Japan and China on October 15th, and we're really excited about the potential to fundamentally change how NT1 is managed with great early response from both patients and HCPs. In the U.S., we've been preparing for launch for more than 1 year, with our medical teams engaging sleep specialists and our specialty pharmacy network and patient support programs now in place. We expect to launch ORZEYFUL through specialty pharmacies as soon as DEA scheduling is complete, which we anticipate by early November. Finally, it makes me extremely proud to share that ORZEYFUL was recently selected as one of Time magazine's Best Inventions of 2026 in the Scientific Innovation category.

Turning to the next slide, we're also thrilled about the early progress with MIMRYLO, an FDA-approved treatment for erythrocytosis in adults with polycythemia vera. MIMRYLO received FDA approval on August 28th and became commercially available very soon thereafter. This is a first-in-class hepcidin mimetic and is administered once weekly by subcutaneous injection. MIMRYLO provides rapid, stable and durable hematocrit control, the primary goal of PV treatment, and has been shown to reduce the burden of phlebotomy and improve fatigue. The prescribing label allows physicians to use MIMRYLO at any point in the treatment paradigm with no box warning, giving us clear differentiation over other advanced therapies approved in this area. Also, it is the only PV treatment listed as a category 1 recommendation in the NCCN guidelines for both high and low-risk patients. This medicine addresses a disease affecting approximately 90,000 people in the United States.

We have been educating physicians about the burden of uncontrolled hematocrit and repeated phlebotomy and identifying patients who can benefit from a new treatment option. We are also leveraging our established hematology capability, payer relationships, and patient support resources to support the launch and build momentum. At this early stage, we are focused on raising physician awareness and securing payer coverage so that appropriate patients can access MIMRYLO. Our goal is to build the foundation for both durable adoption and meaningful patient impact. If we go to slide 8, we have talked about ORZEYFUL and MIMRYLO, so let me focus on our third transformative medicine that we expect approval for within this fiscal year, zasocitinib. The FDA has accepted our application under priority review, and the EMA has also accepted our application.

The clinical data for zasocitinib are compelling, including head-to-head phase III results demonstrating superiority versus deucravacitinib in achieving clear skin. These results further strengthen our confidence in zasocitinib's potential to become a leading oral treatment for people with plaque psoriasis, with rapid, durable and consistent skin clearance. Andy will walk you through details of the head-to-head data shortly. Our payer engagement and field team preparations are well underway. We are positioned for potential U.S. launch following the FDA approval decision planned in the fourth quarter of fiscal year 2026. For each of these medicines, we are tailoring our launch approach to the market while applying the same proven fundamentals, engaging with physicians and payers, establishing specialty pharmacy and patient support programs, and preparing our field teams. With ORZEYFUL and MIMRYLO launches already underway, zasocitinib will build on that experience and the experience from across our portfolio.