Takeda Pharmaceutical Co Ltd (TAK) 2010 Q1 法說會逐字稿

(Interpreted) Please note that this telephone conference contains certain forward looking statements and other projected results which involve known and unknown risks, delays, uncertainties and other factors not under the Company's control which may cause actual results, performance or achievements of the Company to be materially different from the results, performance or other expectations implied by these projections.

Such factors include economic and market conditions, political events and investor sentiment, liquidity of secondary markets, level and volatility of interest rate, currency exchange rate, security valuation, competitive conditions and size, number and timing of transactions.

During the presentation from the Company, all telephone lines are placed for listening mode only.

But the questions and answer session will be held after the presentation.

This conference call is being broadcasted (Multiple Speakers).

(Interpreted) Thank you very much for joining the conference call of Takeda's first quarter financial results of fiscal year ending March 2010.

My name is Hirofumi Inoue, General Manager of Corporate Communications Department.

We have with us presenters and responders, Dr.

Ohkawa, Chief Science Officer; Mr.

Alan Mackenzie, Executive Vice President International Operations; Mr.

Inoue, General Manager of Corporate Strategy and Planning; Mr.

Iwasaki, General Manager of Strategic Product Planning and Mr.

Takahara, General Manager of Finance and Accounting.

Now, we would like to start with a financial overview of the first quarter followed by the R&D update.

After that, we will have a question and answer session.

I believe we have enough time for that Q&A session.

Now, let us start the presentation with Mr.

Takahara, please have the materials ready.

Thank you.

Mr.

Takahara and Mr.

Iwasaki, please.

(Interpreted) Good afternoon, ladies and gentlemen.

My name is Hiroshi Takahara.

It is my pleasure to present you a summary of Takeda's consolidated results for the first quarter of fiscal year 2009.

As shown in this table, despite the increase in sales from the growth of Velcade, the launch of KAPIDEX and ULORIC and the addition of the TAP and Millennium sales into the consolidated account, Prevacid JPY5.5b, Millennium JPY5.6b, the negative impact of depreciation of yen of JPY20.7b was significant.

So hence, consolidated net sales for the first quarter of FY 2009 decreased by JPY17.9b, or 4.5%.

On the other hand, since the in process R&D, JPY166.2b, that was incurred in the previous year was not recorded this quarter, operating income increased by JPY152.8b to JPY125.6b.

The increase in operating income and a decrease in taxes were able to cover the decrease in extraordinary income from the transfer of the Lupron business recorded in the previous year.

That was at JPY74.2b and the net income increased by JPY110.1b to JPY112.6b.

Earnings per share, EPS, excluding extraordinary income loss and other extraordinary factors arising from business acquisitions and other events which the Company uses as one of its target management indices increased by JPY35.01 to JPY162.26 compared to the previous period.

Extraordinary factors have been excluded from the net income numerator to calculate the EPS.

Namely the amortization of goodwill and intangible fixed assets and in-process R&D expenses arising in connection with M&A activities such as with Millennium.

This definition will be referred to in the following slide.

By the way, the financial EPS as stated on the financial statements increased by JPY139.63 to JPY142.64 compared to the previous period.

Please move on to the next slide.

The foreign exchange effect as you can see from this table, net sales JPY20.7b, operating income JPY7.9b, net income JPY5b.

Those are the negatively impacted numbers and the bottom reference table shows the sensitivity of JPY1 variance in the exchange rate on Takeda's results for full year FY 2009.

Move on to the next page please.

While the net sales of ethical drugs in Japan increased by JPY0.5b, overseas, sales decreased by JPY14.9b.

Therefore, the total net sales decreased by JPY14.4b, or 4%, compared to the same period of the previous year.

In Japan, sales increased by JPY0.5b, or 0.3%, mainly coming from Takepron, Actos and Enbrel.

As you can see, the overseas sales of Candesartan, Lansoprazole and Pioglitazone have decreased due to the significant impact of the appreciation of the yen.

On the other hand, the sales of Millennium's Velcade acquired last May --- May last year has increased by JPY6b.

As a result of the above, the total overseas sales of ethical drugs decreased by JPY14.9b or 6.7%.

Sales in the consumer healthcare business due to the decrease in sales of Nicorette and Alinamin drinks decreased by JPY0.8b, or 5.8%.

And as for the sales of other decreased by JPY2.7b, or 11.4%.

Next slide please.

The impact of the TAP integration and the acquisition of Millennium.

This is the comparison representation of the sales of existing business excluding the impact of the consolidation of TAP and Millennium and the impact of the yen appreciation.

Compared to the previous year, sales decreased by JPY8.4b.

This result is mainly due to decreases in gain from outlicensing sales in other business segments.

The decrease in the sales of ethical drugs was kept to a minimum.

Please go on to the next page.

On a dollar basis, the sales of TPNA increased by $81m, or 6.5% to $1,333m mainly because Prevacid sales was included in consolidated net sales from April for this year whereas they were only included from May last year.

Sales of the Actos family decreased by $9m, or 1.1%, due to the shrinkage of the oral anti-diabetic medication market and the reduction of [tierzoecin] prescriptions and increase of metformin prescriptions.

Sales of KAPIDEX and ULORIC for which promotions started in February and March in the US were $11m and $4m respectively.

Let us move on to the next slide.

This slide introduces the changes in ethical drug sales by region.

The figures exclude sales of products for which Takeda acts as a distributor to wholesalers.

The Takeda Group sales as a whole decreased by JPY12.1b, or 3.7%, from the previous year.

Excluding the impact of depreciation of yen, net sales increased by JPY8.4b, or 2.6%, which includes increases related to the consolidation of TAP and Millennium and as well as sales increase in Americas, Europe, and Asia.

This is indicated on the right hand side of the slide.

Move on to the next slide, please.

Now, I would like to explain the sales results for Takeda Group's main products.

All except Velcade, sales decreased compared to the previous year in Japanese yen basis.

Pioglitazone decreased by 6.6%, Lansoprazole by 2.6%, Candesartan by 5.5%, Leuprorelin by 7.5%, which is mainly due to the appreciation of the yen.

Excluding the impact of the foreign exchange fluctuation, Pioglitazone sales increased by JPY0.6b, or 0.6%.

Lansoprazole sales increased by JPY2.3b, or 3.2%, Candesartan sales increased by JPY1b, or 1.6%, Leuprorelin sales decreased by JPY0.8b or 2.3%.

In the Americas, Pioglitazone sales decreased by JPY6.4b, but there was only a small decrease, minus 1.1% in a US dollar basis.

Velcade year on year sales greatly increased by JPY6b with one factor being April this year being one extra month consolidated to Group sales compared with the previous year.

So this JPY6.0b increase is equivalent of 101% increase from the previous year.

And even when comparing US sales from April through June for both years there is an increase of $31m, 34.5%.

Please move on to the next slide.

This slide shows the details of the changes in operating income.

The gross profit margin improved by 1 point due to increased sales of in-house products which have a higher margin.

Nevertheless, because net sales decreased, gross profit decreased by JPY10.6b or 3.3%.

So amortization of intangible assets and goodwill arising from TAP and Millennium acquisitions which were only included for two months last year but for three months this year increases SG&A by JPY7.2b to make overall SG&A increased by JPY6.5b.

On the other hand, our one off in-process R&D expense of JPY166.2b was recorded last fiscal year but was not incurred this period, therefore, the R&D expense decreased by JPY170b.

As a result of the significant decrease in R&D expenses being greater than the increase in SG&A expenses and decreasing gross profit, the operating income significantly increased by JPY152.8b compared to the previous year.

As highlighted at the bottom of the slide, when extraordinary factors excluded, the operating income decreased by JPY6.2b due to the decrease in gross profit.

Now let us move on to the next slide.

This slide talks about the breakdown of net income.

Although the operating income increased by JPY152.8b, non-operating income decreased by JPY8.8b resulting in increasing income by JPY144b.

The reason for this is one, lower interest rates that push down income from financial assets and two, equity and earnings of affiliates related to TAP recorded last year is no longer there for this year.

And furthermore, extraordinary income decreased by JPY74.2b because the gain from the transfer of the Lupron business incurred in the previous year was not received this year.

However, since taxes decreased by JPY39.9b, net income for this quarter increased by JPY110.1b resulting in net income of JPY112.6b.

With respect to taxes, due to TAP integration and the Millennium acquisition, the consolidated effective tax rate became higher at 94.7%.

However, with the revision of the tax law where 95% of the dividends paid by foreign subsidiaries become non-taxable and with the tax effect coming from merger of our pharmaceutical plants and pharmaceutical ingredients of plants in Ireland, the amount of tax decreased and the effective tax rate became 17.7%.

As stated at the bottom of the slide, due to the tax reduction explained above, the net income excluding the extraordinary income loss and other extraordinary factors increased by JPY22.8b.

And this final slide summarizes Takeda's cash flow.

The cash flow for this quarter ended with cash outflow of JPY16b due to the dividend payment of JPY64.5b and corporate tax payment of JPY54.7b.

In detail, operating cash flow had an inflow of JPY76.5b.

Investment cash flow had a cash outflow of JPY22.4b including a payment for the acquisition of IDM and financial cash flow had an outflow of JPY65.2b due to a dividend payment.

As a result, this quarter ended with a cash outflow of JPY16b.

And finally, no changes are made to the original full year forecast announced in May 2008.

So this concludes my explanation.

Thank you very much for your time.

(Interpreted) My name is Masato Iwasaki, General Manager of Strategic Product Planning.

Please allow me to introduce the current status of our development pipeline and R&D activities.

First, I would like to explain the current situation of SYR-322 for the treatment of Type 2 Diabetes.

As already announced, in June 2009 Takeda received a Complete Response Letter from the FDA regarding the new drug application for SYR-322.

The FDA asked Takeda to conduct an additional cardiovascular safety trial which satisfies the December 2008 FDA guidance titled "Guidance for Industry, Diabetes Mellitus - Evaluating Cardiovascular Risk in New Antidiabetic Therapies to Treat Type 2 Diabetes.

Takeda is in discussions with the FDA to reach a consensus about the additional trial design in order to start it as soon as possible.

Please move on to the next slide.

Recent progress of the development pipeline since last earnings report of May 11, is listed here.

In addition to the implementation of life cycle management items, we have started Phase I clinical studies for two new compounds.

I would like to explain briefly about AMG386 and AMG479 and fixed dose combination of Blopress with Actos and fixed dose combination of SYR-322 with metformin in the following slides.

Next slide please.

To begin with, I'd like to explain AMG386 and AMG479 which were in-licensed from Amgen and have recently advanced to Phase I clinical studies in Japan.

By adding these two programs the total of 18 oncology programs are now under development.

And we will strive to ensure successful commercial launching of them and further expansion of the pipeline in this area.

AMG386 is a peptibody which has similar characteristics to both antibody and peptides and inhibits vascular angiogenesis rebinding to both angiopoietin I and angiopoietin II.

That is expected to suppress cancer cells growth and infiltration.

Another program is AMG479, our fully human anti IGF-1R for insulin like growth factor receptor Type 1 monoclonal antibody.

While insulin [pneumatic] action is one of the well known activities of IGF-1, it also stimulates growth and invasion of certain cancer cells.

AMG479 inhibits the binding of IGF-1 and IGF-2 to their receptors.

And thus, it is expected to suppress the tumor cell growth, survival and infiltration.

Japanese pharmaceutical market in antibody was JPY80b in 2007 and it is estimated to expand to JPY170b in 2010 and JPY700b in 10 years.

Since such a high level of sustained growth is expected in the antibody market, Takeda is committed to continuing and reinforcing R&D activities in this area.

Next slide please.

Now, I like to explain the fixed dose combination of Blopress with Actos and fixed combination of SYR-322 with metformin which are newly listed this time.

First, the fixed dose combination of Blopress with Actos which means the combination tablet of hypertension and diabetes.

There are about 8.9m people suspected to have diabetes according to the national health and nutrition survey of the health authority in Japan.

As you can see in the slide, the numbers are increasing rapidly.

In addition, it is said that 40% to 50% of diabetic patients have also hypertension two times higher compared to the people who do not have diabetes.

Furthermore, guidelines for the management of hypertension suggests highest cerebral and cardiovascular risks among patients with both diabetes and hypertension.

In the outcome studies, both Actos and Blopress demonstrated the anti-atherosclerotic effect.

So we are expecting that this combination tablet will contribute to the treatment of the patients.

Now, let me explain the fixed dose combination of SYR-322 with metformin.

This is already -- sorry -- 322 is not marketed yet.

But regarding DPP4 inhibitor and metformin combination tablet is marketed in Europe and US and is well received because it enables better glucose control.

Fixed dose combination can improve convenience and compliance of patients thereby meeting the needs in medical practice.

We will continue the development of fixed dose combination, pursuing every possibility as a part of life cycle management and keep efforts to maximize values of our product.

Next slide please.

Now, let me introduce the latest data about Velcade presented at the ASCO annual meeting in Orlando, Florida from May 29 to June 2 this year.

Doctors are assessing the combination of Velcade in non-Hodgkin's Lymphoma with novel treatment such as bendamustine.

The Phase I/II vertical study is to evaluate the efficacy and safety of Velcade and bendamustine and rituximab in patients with relapsed or refractory follicular lymphoma.

This triple combination was well tolerated and overall response rate reached 80% with 53% of patients achieving complete response.

These results complement Millennium's continued research of Velcade in non-Hodgkin's Lymphoma.

We will continue to establish the value of Velcade based combination therapies in Lymphoma.

Next slide please.

I'd like to introduce the initial results of the Phase I/II multiple myeloma research consortium trial in which researchers investigated the maximum tolerated dose, the safety and efficacy of a novel four drug combination of Velcade, lenalidomide, doxorubicin and dexamethasone.

Researchers are attempting to build on Velcade as a foundation of therapy based on Velcade's mechanism of action, strong activity and combinability with other therapies in both low and high risk patients.

In this study, overall response was 95% with 22% of patients achieving a complete response or near complete response.

The data also shows that this four drug combination was well tolerated in patients with newly diagnosed multiple myeloma and appeared to show high activity.

We hope that after more follow up, these initial results will translate into better outcome for patients.

Finally, this is my last slide.

Please allow me to explain our investment on the institution for industrial innovation.

This institution is an investment fund administered by the Ministry of Economy Trade and Industry of the Japanese Government.

The purpose of this fund is to invest on the business and the companies with cutting edge technologies in the areas of life science, electronics, communications and environment and energy as well as to accelerate the commercialization of the new businesses.

This will open up new possibilities.

In spite of the Japanese economy being in the prolonged financial recession, Takeda is the only pharmaceutical company participating in this fund.

We will actively contribute to R&D activities of cutting edge technologies by participating in this institution as a leading pharmaceutical company in Japan.

Thank you very much.

(Interpreted) Now, we would like to accept the questions from the audience, so can I ask the operator to take it over?

(Interpreted) We have a question and answer session now.

(Operator Instructions)

(Interpreted) (Inaudible) from [New Pacific Group Securities].

(Interpreted) Hello, again.

Please go ahead and ask your questions.

(Interpreted) So SYR-322, which Mr.

Iwasaki mentioned at the beginning so under current situation, the additional clinical testing that you are going to have, so what you are doing right now is that you are in negotiation about the designing of this clinical study.

So how long it would take to do this negotiation from when you should be able to start this clinical testing?

(Interpreted) We are very close to agreement with FDA.

We think so very soon, we will be able to start and announce the start of the additional trial we have.

Thank you very much.

(Interpreted) And in sales, overseas and in Japan, I have a question.

The sales in Japan as a whole, I think you said 0.3% increase, for the full year.

I think the 5% growth is skeptic and market according to IMS data is also growing 5%.

But the first quarter is very low.

Why is that?

So are there any specific reasons?

(Interpreted) My name is Inoue.

So as you may know, that against the previous year when we compare our numbers, the April last year, we have seen an NHI review.

So due to this refraining from the sales, we have seen a significant growth in the first quarter.

And because of that, when we take a look at the three months from April to June, we have seen a slow increase in our sales.

But if we just take a look at the month of May and June, the result has shown that the sale has increased steadily.

And this can be said to all the products.

But in full year's term, we believe that we will be able to achieve the full year target.

(Interpreted) And about the overseas new drugs, KAPIDEX and ULORIC, JPY11m and JPY4m is what we heard but the full year image, when we compare those numbers to full year image, probably KAPIDEX is 1/20th and ULORIC is 1/25.

So, there might be some -- do you see when there will be a buildup of the sales?

KAPIDEX probably this lifecycle is shorter.

So what do you think about that?

Regarding KAPIDEX sales, we have been encouraged by the new prescription trend which already has exceeded 1% of all prescriptions.

And even more so, we see the specialists writing it four times that amount the gastroenterologists.

So the leading indicators are very good for share uptake for KAPIDEX and in line with our expectations, slightly adjusted for later launch timing than was originally planned by about a month.

With ULORIC, we also similarly see very good uptake in the new prescriptions.

Almost 3% now are coming from this market.

And again, when we look at the specialists, the specialists are prescribing at an even much higher rate which also gives us a good sense for leading indicator.

So again, just like KAPIDEX, in line with our expectations and a very good uptake here at the outset.

Thank you.

What about ULORIC?

So ULORIC, again, as I said, is already nearly 3% of all prescriptions in the gout market for new prescriptions.

And when we look at the rheumatologist, the specialist, they are prescribing at a rate of four or five times that rate for new prescriptions.

So a very strong early trend for the uptake of ULORIC and again, very consistent with our expectations.

(Interpreted) Thank you very much.

(Interpreted) Next is Mr.

Muramatsu from (inaudible).

(Interpreted) My name is Muramatsu.

Do you hear me?

Yes?

I have a question to Mr.

Mackenzie first.

This is related to the last question that KAPIDEX and ULORIC at the peak time, when do you think it will hit the peak and what would be the size of the sales in US at the peak time?

Also for KAPIDEX, of course, that is still successor to Prevacid.

How much would it be able to cover the lost sales of Prevacid and ACTOmed XR is coming and I wonder how successful they are as a successor the existing ones and this is a question to Mr.

Mackenzie?

And another question to Dr.

Ohkawa.

As was just mentioned, FDA resubmission will be after 2011.

It is based on the recent situation.

When do you think you will be able to file to FDA?

Regarding forecast, we don't disclose specific forecasts.

We do see, as we previously stated, where we can capture up to 50% of the Prevacid prescriptions over time and at that peak period, again, it is not something that is disclosed.

So for the new products, we are very pleased with the start of these products.

The uptake, as I said before is very consistent with our expectations and things are very much in line.

Thank you.

(Interpreted) This is Ohkawa speaking.

I would like to answer to your question.

As Mr.

Iwasaki mentioned, outcome studies are at the final stage now for CV and so we hope to studies as soon as possible.

We hope that not so far away from the expiration of the Actos.

But then we would like to get approval.

But of course, things depend on how the development will go but we hope to get approval as soon as possible.

(Interpreted) I have another question to Dr.

Ohkawa regarding 322.

DPP4 is marketed in -- is going to be maybe marketed in US ahead of 322.

But you don't think that will undermine your competitiveness?

(Interpreted) Regarding the power of the product, how products are attracted, of course, it depends on the study.

If we can claim [sterology] then we will have strong product.

We have other products including Actos and the combination -- in terms of combination, we have advantages, we think.

Thank you very much.

(Interpreted) Next is Masuzoe San from Deutsche Securities.

(Interpreted) My name is Masuzoe from Deutsche Securities.

So I'm sorry to ask the similar question a number of times, but for the KAPIDEX and ULORIC, so looking from outside, to follow the IMS numbers, even if we take a look at that, we wouldn't be able to get the trend of net sales.

You mentioned that your sales is in line with your expectation.

But can I understand that certain numbers will be shown in numbers tracked by IMS.

Yes, you can see these trends in the IMS data.

Total prescriptions and new prescriptions and then with that trend, that is how we are able to say we're in line with our expectations.

You also can see in the IMS data, the subspecialty data which is very important because it does predict the utilization from the primary care physicians.

And this is typical of new product launches where you will see the early usage coming from specialists with primary care to follow.

So all of this is in the IMS data.

(Interpreted) And one other thing, Actos in America.

So according to your explanation, this oral intake diabetic treatment drug is very severe and because of that, the Actos has gone down by 1% in a US dollar basis.

But for your projection, I believe that you are expecting to see the increase of sales in single digit.

But for Actos, is there any special reasons that you have recorded minus 1% growth for this quarter or the US market as a whole, oral intake market of this is slowing down.

So how can I see the numbers that you have explained to me?

Again, looking at prescription data, we see a stabilization of Actos share and in volume and we also have seen a return to growth a little bit in this market.

This market had declined last year, year over year, but we are now seeing a little bit of growth coming back in the market.

So if we look at our share expectations in line with a slightly growing market that is consistent with a low single digit growth.

(Interpreted) The first quarter you have recorded minus 1% growth for sales, right?

That is correct.

(Interpreted) So is there any special reason that you have recorded negative growth there?

For example, like wholesaler stocking.

Is there any special reason as such?

There has been a very slight decrease in wholesaler stocking levels.

So that would contribute to that.

And in a product of this size, these very slight fluctuations in wholesale stocking can make that kind of difference.

So yes, your point is well taken.

There was a slight decrease in wholesale stocking level during that quarter.

(Interpreted) And one more point about R&D expenses, and it was at JPY550b for the interim and means that second quarter is JPY900b -- excuse me, JPY90b.

So is that because of something that you have prepared for that or is there any plan that you have for that?

(Interpreted) This is Iwasaki.

So due to the delay in quarters, there is a delay in payments and some milestones have not been paid yet.

So it is not as if that has been delayed.

(Interpreted) So then just the JPY90b, so you are going to use them all?

(Interpreted) Yes.

(Interpreted) Okay, thank you very much.

(Interpreted) (Operator Instructions).

Mr.

Onozuka from JP Morgan Securities.

(Interpreted) My name is Onozuka.

I have two questions.

The first question has nothing to do with the first quarter but according to US IMS data, after July, Prevacid share prescription is going down and the decline has increased according to my impressions.

Although it has not expired patent it is -- there is a decline and also maybe strategically you have some bad transaction.

Anything related to KAPIDEX in special factors here for the decline of Prevacid?

So the branded products in the PPI market are all -- have some level of decline with the exception of KAPIDEX new product launch which has -- which is moving upwards.

And we had projected a decline of Prevacid prescriptions and actually the trend is consistent with what we had projected, given the erosion of branded products from the increased usage of generics.

So it's very consistent.

Additionally, as is mentioned, we have launched KAPIDEX.

And we have a very active process to be looking for Prevacid patients potentially to move over to KAPIDEX.

So that also was in our projections and what we're seeing in the IMS data is absolutely consistent with what we had expected.

(Interpreted) Thank you very much.

Second question is SYR-322.

You mentioned additional study design and you said you are close to agreement with FDA?

And regarding the duration of the trial, maybe you have several studies for one year.

Is that correct expectation or maybe you need two year long term study?

Regarding this point do you have any comments?

(Interpreted) Regarding the period or duration of the trials, several studies of one year may be one option, but maybe another option could be a two year study.

We are in the final stage of discussion with FDA so we hope that we can announce to you very soon, so today, for today I can't add comment on that.

Thank you very much for your understanding.

(Interpreted) Thank you, that's all from me.

(Interpreted) Then our next questioner is [Mr.

Morauka] from Morgan Stanley Securities.

(Interpreted) Hello.

My name is Morauka from Morgan Stanley Securities.

So this is, SYR-322 in Japan.

This was filed last year but would the FDA decision make impact this process in Japan or not?

(Interpreted) This is Iwasaki.

Right now, there isn't any impact so far.

(Interpreted) That means that the -- this approval process in Japan is smoothly progressing, is that correct?

(Interpreted) Well we are in the process of getting approval so we are not sure whether this is smoothly or not.

But so far we haven't got any feedback with respect to this approval from the regulatory body.

(Interpreted) And another question about the US.

So MR in the sales force.

Do you consider of reducing the sales force in US, or MRs in US?

We have no plans to reduce our sales force at this time.

(Interpreted) Thank you.

(Interpreted) Next is Mr.

Sakai from Credit Suisse Securities.

(Interpreted) This is Sakai speaking.

I have two questions.

One is AMG479 cancer type.

It's maybe you are going -- you are thinking of colorectal cancer?

What would be the cancer type for 479?

(Interpreted) Just a moment please.

This is Phase I yet, so we have not decided on cancer type yet.

So I cannot comment on that.

(Interpreted) However, having seen your compounds right, so I suppose you have the certain cancer types and I suppose you are in line with the others regarding what you are thinking.

The Actos Plasmid XR, the criteria is now higher and this will be launched in the second half of this year.

That I understand and of course Metformin price is high, therefore pricing may be an issue.

There could be some strategic issues about pricing.

At what timing that will be coming into the market, Actos is now declining, unless of course you want to have this in the market as soon as possible and maybe you are trying to push it earlier than the plan for launching?

(Interpreted) This is Iwasaki speaking.

Well as we report to you, within this year we want to launch and nothing has changed since that full fiscal year.

Not calendar -- I mean calendar year, by the end of this year we want to launch.

And for the pricing, it is a matter of strategy so we can not disclose any details at this point.

Thank you for your understanding.

Barclays Capital Securities, Mr.

Yoda is the next questioner.

(Interpreted) This is Yoda from Barclays Capital Securities.

I have one question about the ULORIC patient.

Allopurinol (inaudible), are they the main patients of using the ULORIC or are you getting a new patient?

So the primary source of the patients coming over to ULORIC are coming over from Allopurinol.

Although we are seeing a bit of acceleration on the total market growth so which tells us that there is some patients either returning to the market, or some new patients coming in.

But basically, we can see the shift through the IMS data of decline in Allopurinol rates with an offsetting increase from ULORIC.

(Interpreted) Thank you very much.

That is all from me.

(Interpreted) Next is Mr.

[Nemoto] from (inaudible).

(Interpreted) My name's Nemoto.

I have a question to Mr.

Takahara.

So about this first quarter result the JPY20.7b of the sales has been due to the yen appreciation.

But I understand that the volume of the sales in terms of unit has increase.

But if this yen appreciation continues, then the volume would achieve the target, but in the yen basis you won't be able to achieve a target.

Would that be the correct assumption here?

(Interpreted) So this is Takahara speaking.

So this fiscal year, so when we announced our full year forecast on a foreign currency basis for both Europe and America, we have expected increase in sales.

But the yen appreciation impact was JPY57b and I believe that 2.5% decline in sales, that was what we had announced at the full year forecast and there hasn't been change of this perception at all.

(Interpreted) Then about the change of the foreign exchange rate, do you have any approach as to reduce the foreign exchange fluctuation impact?

(Interpreted) So with regard to the foreign exchanges, the business that we have with the overseas sales companies.

We do our business in a foreign currency and the -- all the exchanges between foreign currency and Japanese yen is consolidated here in Japan.

And at the full year forecast, we assume -- we came up with this -- assumed a foreign exchange rate for this full year.

And in order for us to hedge that, we get the options or the forward contract -- foreign currency contract of the 70% or 80% of the total volume.

But for the overseas profit portion, the foreign exchange translation will come out.

So we cannot hedge each individual transaction.

So that will be exposed to the foreign exchange fluctuation.

(Interpreted) Thank you very much.

(Interpreted) Next is from Mr.

[Devesh Singh].

The next question is from Mr.

Dervish from (technical difficulty) Partners.

Please go ahead.

Hi.

This is Dervish from Mehta Partners.

I have one question on SYR-322 combination drug with Actos.

That [225] has been delayed by FDA and 322 the future plan is not clear.

So it may get -- you may need to carry out two year trials or so.

So I just wanted to understand what is the meaning of extending combination drug 225?

Is there any possibility that a combination drug can get approved before 322 comes to the market?

(Interpreted) This is Iwasaki speaking.

As was announced PDUFA date for Actos 322 is September 4.

That was postponed to September 4.

That was according to FDA's announcement.

Apart from mono and to be launched I heard of the mono drug.

(Interpreted) Of course we hope that would be possible but that possibility, we consider is very, very low.

Okay, thank you.

(Operator Instructions).

(Interpreted) So ladies and gentlemen thank you very much for your questions.

With this, I would like to conclude the Takeda, the first quarter of conference call.

Thank you very much for attending, despite your busy schedules.

We hope that you will be supporting our company going forward as well.

Thank you.

Portions of this transcript that are noted "interpreted" were interpreted on the conference call by an Interpreter present on the live call.

The interpreter was provided by the Company sponsoring this Event.