Takeda Pharmaceutical Co Ltd (TAK) 2011 Q3 法說會逐字稿

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 are not under the Company's control which may cause actual results, performance or achievement 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 market level and volatility of interest rate, currency exchange rates, security valuations, competitive conditions and size, number and timing of transactions.

(Operator Instructions). Now we start the conference with the presentation.

Thank you very much for joining Takeda's conference call of third quarter financial results, FY2010. My name is Hiroshi Ohtsuki, Senor Vice President in Corporate Communications.

Now let me introduce today's members. Dr. Shigenori Ohkawa, Director and Chief Scientific Officer; Mr. Masumitsu Inoue, Senior Vice President of Corporate Strategy and Planning; Mr. Masato Iwasaki, Senior Vice President of Strategic Product Planning; and Mr. Hiroshi Takahara, Senior Vice President of Finance and Accounting.

We would like to start with financial overview of the third quarter of fiscal 2010, followed by the topics of R&D activities. After that we will have a Q&A session. We have enough time for Q&A. Your questions are most welcome.

Now, let's start. You have the presentation materials and earnings report at hand, please. Mr. Takahara, please.

Thank you very much. This is Takahara speaking, Senior Vice President in charge of Finance and Accounting. It's my pleasure to report Takeda's consolidated results for the third quarter FY2010.

Slide two is a summary of consolidated results up to the third quarter FY2010. Compared to the same period last year, net sales decreased by JPY46.8b or 4.2% to JPY1.0811 trillion.

In the US, sales of ACTOS and VELCADE increased. And in Japan, seven new products launched last year pushed up sales. But sales of PREVACID in US decreased significantly because of the patent expiration, and the yen appreciation impacted negatively, resulting in a decrease of net sales.

As for profit, in spite of a reduction in SG&A and R&D expenses, it was not enough to offset a decrease in gross profit resulting from decreased sales. Net operating income was down by JPY23.7b or 6.7% from the same period last year, to JPY336.5b (sic - see presentation). In addition to a decrease in our operating income, non-operating income was down because of the yen appreciation, resulting in a decrease of ordinary income by JPY32.8b or 8.9% to JPY336.5b.

Last year we had a lower tax because of restructuring of our subsidiaries in Ireland. But this fiscal year we did not have a special factor like that and the tax was higher.

The net income was down by JPY43.7b or 16.8% from last year, to JPY215.5b. EPS was down by JPY55.31 from last year to JPY272.99. Excluding extraordinary income loss and other extraordinary factors, EPS was down JPY65.89 from last year to JPY318.15. Next slide, please.

The negative impact of foreign exchange was as follows. On net sales, JPY44.7b and JPY15.3b on operating income, and JPY10.2b on net income respectively.

Please note that a decrease in sales was mostly FX impact. A decrease of PREVACID sales in US due to patent expiration was JPY671m, but that was almost all absorbed by increased sales of new products in Japan and by increased sales of ACTOS and VELCADE in US. Next slide, please.

Let me explain changes in sales by business segment. For the sales of ethical drugs in Japan, sales of ENBREL increased, and seven new drugs, including VECTIBIX, pushed up sales by JPY13.9b or 3.2% from last year.

For overseas, sales were down JPY64.4b or 11.0% from last year. In US, sales of Pioglitazone and VELCADE increased. So did DEXILANT and ULORIC, which marked the second year since launching, but it was not enough to absorb the yen appreciation impact and the significant decrease of Lansoprazole in US due to patent expiration.

Sales of healthcare business was up JPY1.3b or 2.8% from last year, thanks to increased sales of ALINAMIN tonics and BENZA. Other business was up JPY2.3b or 3.3% from last year. Next slide please.

Now let me explain the consolidated ethical drug sales by region. The Takeda Group sales as a whole decreased JPY50.8b or 5.0% from last year. Excluding the FX, the sales decreased by JPY6.6b or 0.6% from last year. Sales in Americas and Europe decreased, while sales in Japan and Asia and other regions increased. Excluding the FX on local currency basis, sales increased not only in Asia but also in Europe. Next slide please.

Now I will explain the sales results of Takeda's main products. Sales of Pioglitazone and VELCADE increased by JPY2.2b and JPY4.4b respectively. But sales of Lansoprazole, because of patent expiration in US, decreased as much as JPY72.5b. Candesartan, Leuprorelin also decreased, but excluding FX they were both up in sales. Next slide, please.

Let me explain the breakdown of operating income. Due to the decrease in net sales and the decrease in gross profit margin by 2.7 points, the gross profit was down JPY66.9b or 7.3% from last year. This is mainly because of decreased sales of PREVACID, with a high profit margin and the yen appreciation.

The amortization cost of intangible fixed assets and goodwill decreased by JPY12.8b from last year. TPNA and the Takeda Group as a whole worked hard to reduce expenses, thus SG&A expenses were down by JPY23.9b or 6.9% from last year.

Lower development expenses and yen appreciation helped to reduce overall R&D costs by JPY19.3b or 9.2% from last year. Thus the operating income was down JPY23.7b or 6.7% from last year. Next slide, please.

Next is breakdown of net income. The operating income was down JPY23.7b and non-operating income was down by JPY9.1b because of the yen appreciation. Taxes also increased by JPY10.9b and the net profit was down JPY43.7b or 16.8% from last year to JPY215.5b.

As for the tax, in the previous fiscal year the tax payment was lower than usual because of the restructuring of the two companies in Ireland, and the effect is consolidated tax rate was 29.3%. This year we did not have a special factor like this and the effective tax rate was 35.3%. Next slide, please.

The cash flow for this term was minus JPY95.8b. Main factors were income tax payment, JPY126.7b, payment for acquisition of tangible asset associated with the [Shona] Research Facility, JPY111.4b, and payment of dividend of JPY133.6b, and the impact of FX loss, which was JPY73.7b. Next slide please.

Lastly, let me explain the forecast for the full year. Based on the cumulative results up to the third quarter and our review of the FX assumption, there is no change in our guidance from the Q2 earnings report last October. The dollar/yen assumption was revised from JPY84 to JPY85 and the euro/yen revised from JPY114 to JPY112, but the impact is not significant, about JPY3b, so we maintain our announced forecast.

Against last year, the sales will be down JPY66b and operating income also down by JPY70.2b. The negative impact of FX would be JPY61.0b in sales and JPY20b in operating income. On the right-hand side you can see the numbers. And the impact of JPY1 difference in FX is shown in the bottom table.

That is all. Thank you very much.

Thank you very much. Now we would like to invite Dr. Ohkawa, please.

I am Ohkawa. I am the Chief Scientific Officer. Allow me to speak about the topics concerning our R&D activities that have emerged after the announcement of our financial results for the second quarter of fiscal 2010. This is how the pipeline progressed.

First of all, REMINYL treatment for dementia of Alzheimer's type was approved by the Ministry of Health, Labor and Welfare of Japan.

Contrave, the obesity drug, was receiving the results from FDA. And when the long-term administration was continued, there was a concern of adverse effects. So when we administer this to the obese patients, we have to look at the effect on cardiovascular risk and we have to get a knowledge that the cardiovascular risk is lower than the benefit enjoyed by the Contrave. So we would make further efforts on that.

Hematide which is the -- discussed by the FDA, and based upon the results of the consultation, we are going to make a submission for NDA with indication of renal anemia for the dialysis patient. And we would make a submission between April and June this year.

For AMG386, this is an anti-tumor drug. We started the Phase III trial.

Lu AA21004, this is a major depression drug, and the Phase II and III studies started in Japan.

And the rest of the compound and its progress in development is listed in the slides.

Now I would like to introduce the topics of research and development. First of all, last March we have concluded the joint sales contract with Belgian Johnson & Johnson Pharma KK. This is REMINYL for Alzheimer dementia treatment drugs, approved by [MHOW] in January this year.

It has the acetylcholine esterase inhibition actions, increasing the acetylcholine concentration in the brain. And it has a very unique feature. It augments the nicotinic acetylcholine receptors. It would activate the cholinergic functions, which is lower in Alzheimer dementia patients, and it would suppress the progression of the dementia symptoms. And we are thinking of launching this product in March, taking the timing of price listing into consideration. We would like to maximize the product value in Japan and we would like to further enhance the CNS region, which is one of the priority areas for Takeda.

Next is our anti-cancer pipeline. First is AMG386 of Amgen discovery. AMG386 is an angiopoietin-inhibiting peptibody, which has been developed by Bio -- Takeda Bio Development Centre in Japan. It works on angiopoietin systems and it inhibits the binding of angiopoietin 1 and angiopoietin 2 to Tie2 receptors, which would play an important role in the stability of angiogenesis and the neovascularization. And by doing this it has an anti-tumor effect.

We have a very favorable result. And Phase II studies and Phase III study in Japan will be conducted where Takeda Bio participate in the TRINOVA-1 study, which is globally conducted by Amgen. It would be a very novel anti-tumor drug for relapsed/recurrent ovarian cancer, which has a very narrow option of treatment. And it has a very new mode of actions.

Now I would like to show you some of the data published in the Japanese Society of Hematology, December 2010. SGN-35, or brentuximab vedotin, which was introduced or licensed in from Seattle Genetics, and I would like to introduce the results of the Phase II study.

The brentuximab vedotin has the antibody compound complex with a target of CD30 antigens. And the potent drug Auristatin is selectively carried to the cancer cells, where the CD30 antigen is expressed. It would reduce the adverse events and it would have a targeted action on the target cells.

For the study -- in the studies with recurrent and intractable Hodgkin lymphoma, the primary endpoint has an objective response rate of 75% by the dependent [raters] and the CR was achieved in 34% of the patients. And 94% of the patients showed volume reduction of the tumor.

For the systemic aplastic large-cell lymphoma study, the objective response rate, which is the primary endpoint, was 86% by the independent [raters], and the CR was 53%. 97% of the patients showed volume reduction of the tumor.

In these two studies, the major adverse event was peripheral neuropathy, nausea and fatigue. In any of these diseases, it is very rare to have that high response rate in the patient who has relapsed or the intractable tumor. So SGN-35 is expected to be a new modality or new option of treatment. In order for us to have a submission in the EU in the early 2011, we are going to continue our consultation with MAA with detailed results of the test results.

Next is the VELCADE and Rituximab combined treatment and comparative study with VELCADE alone and VELCADE with Rituximab for recurrent and intractable follicular lymphoma. The primary endpoint here is the patients without events. And VELCADE plus Rituximab group showed significant improvement compared to the Rituximab monotherapy group.

The secondary endpoint was the total response rate and CR. And VELCADE plus Rituximab showed significantly better results than Rituximab monotherapy.

In the VELCADE combined group, the patient with poor prognosis showed the improvement of [activation] free survival, and there is an extension of the interval between the treatments. And this is very important. And we are trying to have a submission in 2011 for the indication of relapsed and intractable follicular lymphoma.

Next is the comparative study of subcutaneous and intravenous injection of VELCADE. The total response rate after 12 weeks of administration of VELCADE is 42% in any of the groups. For a peripheral neuropathy in subcutaneous group, 38% of the patients had peripheral neuropathy and intravenous injection group had 53% of the peripheral neuropathy. The ratio of a peripheral neuropathy of grade 3 or higher was 6% and 16% respectively. So the subcu group had significantly lower incidence of peripheral neuropathy compared to the intravenous group.

What is very striking is that the subcu formulation of VELCADE reduces the incidence of peripheral neuropathy, compared to the intravenous formulations. And it would be -- there would be a possibility that it can be a necessary option for the treatment. Subcu allows the patients to have a self injection of VELCADE and it would reduce the burden of the patient to make a bi-week -- twice-weekly visit to the clinics. We are trying to have a submission in 2011 for the VELCADE subcu formulation.

We are trying to utilize the external resources to the maximum extent so that we can improve the productivity of research and development. I would like to introduce joint research which we have agreed upon after the announcement of the second-quarter announcement.

In the field of obesity, we made the joint research contract with Florida University and Sanford-Burnham Medical Institute. This is a two-year joint research contract for the discovery and evaluation of novel treatments for obesity. We are trying to identify the discovery target of the peripheral obesity treatment drugs. And we are trying to identify the metabolic signals, metabolic genes and metabolic pathways which can be biomarkers. It will help us evaluate the patients -- it will help us evaluate the patient survey and the basic research at the same time.

In January this year, we had the collaboration with Kyoto University. And we started the CNS controlled drug, basic and clinical project as the Open Innovation Discovery Center. We are trying to conduct the basic research and we would have the knowledge and clinical data accumulated at Kyoto University Medical School and Kyoto University Hospitals. And we are trying to utilize the worldwide network of Kyoto University so that we can identify the new targets and biomarkers and we would conduct further candidate compound studies.

Now I would like to talk about joint research in the future of CNS. As has been introduced in the second-quarter announcement, we have started joint research with Envoy Therapeutics since October last year. Envoy Therapeutics has the bacTRAP technology, where the genetic -- gene engineering and the molecular biology were combined. And we are trying to explore the drug discovery target for schizophrenia.

Since last November, we have conducted -- we have started joint research with Sage Bionetworks on CNS diseases. Sage Bionetworks have a lot of analytical methods on genetic information and we can develop the disease projection models and we can identify the genes and biomarkers which play a key role in CNS. We would collaborate then to explore the proteins which can be a target and we will prioritize those proteins. I believe that it would help us elucidate the mechanism of action of the -- and mechanism of onset of the CNS disorders.

As introduced before, in the central nervous system, basic and clinical project with Kyoto University will help us lead -- help us discover the drug for schizophrenia as well.

Another collaboration in CNS is the collaboration with Zinfandel. And this is to develop the biomarkers to predict the risk of Alzheimer's disease among the healthy elderly populations. And we concluded the license agreement -- exclusive license agreement globally with Zinfandel concerning the TOMM50 stage of development production, use and commercialization. TOMM40 will be able to identify the high-risk elderly patients for Alzheimer's disease, so both companies would collaborate so that we can verify TOMM40 and we would conduct the clinical trials on Pioglitazone for the healthy high-risk patients.

Thank you.

Thank you. Now we would like to take questions. We can take questions in English or in Japanese. Operator, please.

(Operator Instructions). From Citigroup, Mr. Yamaguchi, please.

Hello.

Yes, we hear you.

Thank you. This is Yamaguchi. NESINA and ROZEREM, what's the performance so far?

Can you say that once again?

NESINA and ROZEREM, what are the numbers, performance of those two products?

This is Takahara speaking. NESINA, JPY1.3b. ROZEREM JPY800m.

Thank you. VECTIBIX is selling very well, but NESINA, ROZEREM, not so well, I suppose. And including that for the domestic sales, excluding Pfizer, I think the sales was up 0.7%. Probably it is below your expectation. What are the factors of this performance? Maybe you have too many products, therefore sales of each item is not going so well. Is that right?

This is Inoue speaking. As you mentioned, from April to December, cumulative numbers against last year it is higher, but these are new products, and the plan includes many new products. So towards the year end the sales will go up. TAKEPRON indication was added and [Echard] long-listed, and also UNISIA was also a factor. Therefore they will go up towards the end of the year.

The in-license products are selling very well, pushing up growth. But for the in-house developed products we hope for the full year that 3% growth will be achieved.

Regarding the promotion of new products, Mr. Iwasaki, can you mention that?

This is Iwasaki from Product Strategy. Regarding NESINA, the drugs that you can use in combination may be an impacting factor. The long-term administration is not quite possible yet. And I hope that you will see the sales with a long term. Also the Thiazolidinedione] indication is there; and the other day, SU and Metformin, regarding indication of combination with those drugs, it passed the first section of the Evaluation Committee. Normally there would be no issue towards the approval of those indications that would mean that this can be used with almost all the drugs in combination, and probably the most broadly available ones, regarding what combination drugs you can use.

And regarding ROZEREM, this is unique to Japanese doctors. When a new product comes into the market, well, this is really a new, novel drug with a new mechanism. Therefore the doctors are exploring, I think. Having said that, the feature of this product is very good safety profile, and that means that elderly people can use it for long term.

In US, when ROZEREM was used among the American benzodiazepine type drug, it's something very familiar among the American patients. And some were concerned the efficacy was not so good. But for the Japanese patients the doctors are feeling very -- the doctors are receiving very good feedback and the doctors are feeling that this is very efficacious.

Some patients -- some doctors who do not -- who are not really used to prescribing sleeping pills, they start -- they feel comfortable about this. So I think we can expect good figures going forwards. Hypertension and diabetes, when the patients have those diseases then they complain insomnia, and that the number is twice or three times more than the other patients. Especially for diabetic patients, they have hard time falling asleep. And there are various types. For example, they go toilet quite often during the nighttime and they have anxiety regarding their diabetes itself. And therefore they tend to have hard time regarding securing good sleep. And those symptoms can be addressed by this drug, and the doctors have good feel about it. And for NESINA and ROZEREM, I hope that we can do better in future. Thank you.

I have another question to ask. Is it okay? [Contra], CV risk can be -- it might be difficult to evaluate the CV risk earlier. [MR] has some experience; this is SYR-322. The hurdle seems to be very high. Am I correct in understanding this?

Will you please repeat the last part of your question?

If I understand it correctly, the cardiovascular events and evaluation of cardiovascular events, although is difficult, because of the SYR-322 experience, it might be difficult to predict the cardiovascular risk.

(Interpreted). We have the FDA consultation with Orexigen, and we haven't finalized what kind of study is to be necessary. We are going to further consult and discuss with FDA, so I would refrain from commenting on that. But one of -- Orexigen stated that the blood pressure will slightly increase, and this is indicated by FDA. This is our speculation, or this is our guess.

Concerning the study itself, we are not in the position to answer you definitely. However, we don't know whether this applies to all obesity drugs, anti-obesity drugs or not. And obese patients have -- have to take the -- this is not the drug which the obese patients have to take forever, like diabetic drugs. So it is difficult to make a conclusion now.

The obese -- anti-obesity drug in our study, we are trying to -- we put the priority in the safety of the drug. And we are studying the central obesity and peripheral obesity drugs. And we have -- we are conducting research and development, taking the safety into serious consideration.

Thank you. Next question, please.

Mr. [Muramatsu] of Nihon Keizai Newspaper. Mr. Muramatsu, please.

Can you hear me?

Yes.

I have a question to Mr. Takahara and Dr. Ohkawa. To Takahara-san, I read the R&D cost and there is a decrease in the R&D cost. Are you intentionally suppressing the R&D expenses or is it because of the delay in the clinical trials? What's the factor affecting the lower R&D expenses?

I want to make a confirmation. R&D expenses are lower in the fourth quarter compared to the quarters from the first to the third. So this is what you were asking?

So in comparison to the previous year, and also we wonder whether you can use all these expenses through the end of this quarter.

JPY190b and up to the third quarter, and the fourth quarter has a large proportion of the R&D cost; this is what you want us to tell. And there are two special factors. First of all, in February we have [Shona] Research Laboratories. And because of the inauguration of the laboratories we have to amortize all the equipment for the laboratories, and these are listed in the fourth quarter.

And also licensing product and related expenses are incorporated in the budget. Up to the third quarter no big licensing products were concluded in a contract, so we will accelerate our activities in the fourth quarter. And we will have a conclusion of the contract for licensed-in products. And that's why we have a bigger proportion of R&D cost in the fourth quarter.

Next question is to Dr. Ohkawa. Concerning [Efemenil], Aricept and [Memelie] or Memantine can be your competitors. Compared to the competitors, what is your superiorities and how does this contribute to your pipelines?

Ohkawa speaking. Thank you very much for your question. In my presentation I mentioned that the acetylcholine esterase inhibition is one of the properties, but nicotinic acetylcholine receptors, which is involved in the memory and cognition, will be augmented. This is the point of differentiation from our competitors. In treating the Alzheimer's disease, we have to enhance or improve cognition of the patient, so this is one of the differentiation points of a product.

And have I talked about the contribution? I'm Iwasaki of Product Strategy. Contribution, when can they contribute to our performance? [Donepezil]. If there are two papers which have a head-to-head comparison with Donepezil and [Dipacinamens] and Memantine, there are no head-to-head comparison studies published yet. But in case of Memantine, it has a different mechanism of action from Galantamine. So Aricept, the -- not all patients are responding to that. So sometimes we have to or the doctors have to switch the medication when the previous drug became ineffective. So I believe that the contribution is rather early. Does that answer your question?

Yes. Thank you.

Thank you very much. Next question, please. From Deutsche Securities, Mr. Masuzoe. Please go ahead.

This is Masuzoe. Thank you very much. Regarding SG&A, in the fourth quarter you had more than the other quarters. In US restructuring effect may come out in the fourth quarter. And SG&A is going to be down. Also the yen appreciation is a factor. Compared to last year it's going to be much more down.

Regarding SG&A, we have announced numbers. And there would not be much change from those announced numbers. Regarding restructuring effect, as I mentioned before, compared to last year, TPNA portion, the costs was down [JPY47m]. That's the number up to the third quarter. For the fourth quarter we would see more effect probably, but the announced numbers will be maintained and I think that's where we are going to land.

Thank you very much. And after the second-quarter earnings, ACTOS sales had gone very well in the US. Any other revisions of your forecast or numbers, you did not have any, but you had better numbers and worse numbers, therefore all in all you have no change or revision of your forecast or numbers?

Well, as you know, FX is impacting the yen appreciation. In May, we announced numbers, and compared to that, for the full year, well, I think it was JPY90 to the dollar and JPY130 to the euro; but now it is around JPY85 to the dollar, and euro JPY112. That's the assumption, and about JPY45b negative impact compared to the initial assumption. But, as I said in the interim report, some products are selling much better than our expectation, therefore those better sales can absorb FX. Therefore we maintained JPY400b. That is our current forecast.

Contrave, in September I think it was introduced, and then [BP] going up, or had the numbers also going up, you did not have any concern like that when you in-licensed that?

Iwasaki from Product Strategy. Regarding that point, we made a good evaluation and we thought we can go ahead. Of course, the risk was incorporated into the values we calculated, but we did not think it was anything critical.

So FDA was too strict on you, or that is our understanding. My last question, VELCADE subcu, the patent will be prolonged because of the subcutaneous administration. Is that a possibility?

Well this is a matter of patent, but this is Ohkawa speaking. I don't think this will prolong patent protection period. This is for convenience and there are benefits for the patient. So, from patient's perspective, this will bring much benefit. That is our thinking in development.

Thank you very much.

Thank you very much. The next question, please. Credit Suisse Securities, Mr. Sakai. Mr. Sakai, please.

Good evening. I'm Sakai. I have two questions. One, it is not related to your performance, but [Danzen], and Danzen cannot show efficacy, and the annual sales is JPY6b, so it's not affecting a lot. But, as a pharmaceutical company, how do you handle this issue? So will you please describe this?

Iwasaki speaking. It is true that in the clinical trials efficacy was not observed and we submitted the results to the authority. We have made analysis from different perspectives and different viewpoints, evaluation methods. The selection of the patients might be the cause of the lack of efficacy. But the subcommittee in the authorities, they decided to continue discussing this compound for approval. And we are going to continue consulting with the authorities. And that's what I can tell you. I cannot tell you anything more than that.

Does that affect the other products?

You mean for the competitors? No.

For competitors and your companies.

It is not appropriate for us to make a -- to comment on that. But it won't affect other compounds of ours.

Thank you. Another question is SGN-35. And there was a formal publication of that data in ASH. And in the interim report you mentioned this American right. How -- what is your negotiation with this? Commercialization is coming closer, so are there any developments? And it might be the deal between Millennium and Seattle Genetics. And if you use SGN technologies, Millennium and Seattle Genetics' collaboration is limited to SGN-35 or does that expand further? These are the questions I want to ask you.

Thank you very much for your question. Ohkawa speaking. In US and Canada, the sales and marketing rights might be the topic. If we are to license out to the third parties, Millennium has the exclusive right of negotiation. But this is a matter of possibility. And we are -- we have to continue studying whether it is possible and whether there are any opportunities.

And for ADC, antibody and drug conjugate technology, Millennium and us are interested in that technology. And it is useful; SGN-35 established the usefulness of the technology. So in this field it can be a core technology in antibody products and antibody medicine -- antibody development.

And is it documented or is it your future prospect?

We have rights in several products. And based upon that, we are developing several R&D projects.

Thank you.

(Operator Instructions). Thank you very much. There seem no more questions. Just a minute. Mr. [Fujimoto] from [Giho], please go ahead.

Hello. This is Fujimoto. Do you hear me?

Yes.

(Interpreted). I have basic questions. For VELCADE, in 2011 filing, where is it going to be filed? US, Japan or Europe?

I did not hear you very well. Can you repeat the question?

VELCADE for refractory and relapse and for subcutaneous administration, where is the submission going to be? Can you confirm where it's going to be?

For refractory and recurrent lymphoma? This is Iwasaki. In US.

Both in US?

That's right.

Thank you very much.

Another question. Well, this is going to be the last question because the time is almost up. Thank you, go ahead.

From Nikko Cordial Securities, Mr. Nakazawa. Go ahead.

Hello. Nakazawa from Nikko Cordial Securities. I have two questions. NESINA sales in Japan, how it is going? ACTOS and (inaudible) you have and the combination is possible, so I thought the sales could have been better as I reviewed that. But SU and Metformin combination, so more options, therefore sales may increase in future. But NESINA, you have JPY1.3b. But are there any factors, like Januvia may be very strong or, like NESINA, Japanese evidence is not enough? So there could be other factors that you can think of. Can you elaborate on that?

Iwasaki from Product Strategy. As you mentioned, the uptick is not fantastic; that is right. Well, Januvia is selling very well. And in case of Merck, well, they have only Januvia. And they try to differentiate from other diabetic drugs, working hard on that and try to get more prescriptions. But we need to accept reality. And in Japan, Januvia DPP-4 inhibitor is appreciated very much. And, in our case, we were behind in launching by seven months from them.

NESINA itself has good evaluation, I think. And regarding the cases who are on this drug, they give us very good feedback. So it's hard to say. But as a fact, Januvia is working very hard and they're selling. Of course, in terms of broad base of indication, maybe that is a factor. SU is most widely used in this patient group. And we hope that we sell better because we can now have combination with SUs.

Thank you very much. And the last question, Pioglitazone for Alzheimer's disease research, Dainippon Sumitomo was going to start a similar project, PPAR-gamma. And the -- how does that work on this? Can you explain the mechanism?

This is Ohkawa. Dainippon started that kind of approach, I never heard of that. I don't think that is true. And for the Pioglitazone, for clinical and non-clinical, especially mitochondrial function may be more activated because of Pioglitazone. And that is widely more known and we have high expectation.

When you think of Alzheimer's treatment, there have been many clinical studies, including other companies, but almost all of them failed because the treatment in later phase after the onset of Alzheimer's is sometimes too late. You need at an early stage identify risk factors and symptoms. By using biomarkers you can start treatment. I think that's going to be the mainstream going forward. And that means to identify high-risk patients and prevention of high-risk people before they start. And prevention is important. So biomarker technology and action of Pioglitazone in combination may be able to contribute to prevention of Alzheimer's. Then that is what we are challenging.

Regards -- gamma and alpha balance is important according to Dainippon. I think ACTOS is also partially gamma-agonist, so maybe that would give [amount].

Well, regarding PPAR-gamma, alpha/gamma/delta we have researched in -- of those, but specifically in diabetes. And in our interpretation, yes, alpha has its specific action and there could be some adverse event we need to consider. And for Alzheimer's treatment, gamma is the biggest contributor. Therefore ACTOS including safety needs to be considered. Of course ACTOS has a good safety database and this kind of safe drug can be used for Alzheimer's disease. That's the best option, we think. So that's our thinking now.

Thank you very much.

Thank you.

Thank you very much for your questions. We would like to -- we have received a lot of questions and, however, it is already behind schedule. And we would like to close today's conference. Thank you very much for your participation despite your very busy schedule. If you have further questions, please contact Takeda Corporate Communication department. And I would like to have your kind support and collaboration in the future. Thank you very much once again for your participation.

Thank you for taking your time, and that concludes today's conference call. You may now disconnect your lines.

Speaker statements on this transcript were interpreted on the conference call by an Interpreter present on the live call. The Interpreter was provided by the Company sponsoring this Event.