Takeda Pharmaceutical Co Ltd (TAK) 2012 Q1 法說會逐字稿

Please note that this conference call 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, investor sentiments, liquidity of secondary markets, level and volatility of interest rates, currency exchange rates, security valuations, competitive conditions and size, number and timing of transactions.

During the presentation from the Company, all the telephone lines are placed for listen mode only and a question and answer session will be held after the presentation. This conference call is being broadcasted through Internet Online but only for listening mode. Now we start the conference with the presentation.

Thank you very much for joining Takeda Pharmaceutical's earnings report conference call for the first quarter FY2011. My name is Ohtsuki from Corporate Communications. I will be moderating today's call. Let me introduce our members at Takeda. Dr. Ohkawa, Chief Scientific Officer; Mr. Inoue, Corporate Strategy and Planning; Mr. Iwasaki, Strategic Product Planning and Mr. Takahara from Finance and Accounting.

First, we will explain the financial overview of the first quarter of FY2011 and then topics of R&D activities. After that, we will have Q&A session. Please refer to the presentation materials as you listen. First, Mr. Takahara.

I'm Takahara, Senior Vice President of Finance and Accounting Department. I'd like to explain FY2011 consolidated financial results for the first quarter.

As shown in this table, the first quarter marked increases both in sales and income. Despite the negative impact of the yen appreciation of JPY16.1b, net sales increased by JPY2.5b or 0.7% from the same period last year to JPY357.2b.

Operating income increased by JPY8.9b or 8.3% to JPY116.2b.

In addition to the increase in operating income, non-operating income improved to mark an increase in ordinary income by JPY15.4b or 14.8% to JPY119.2b.

Net income also increased by JPY11.5b or 17.9% to JPY75.6b.

Next slide, please.

This is a breakdown of net sales by business segment. Thanks to a rise in sales of new products launched in 2010, including Vectibix, the ethical drug sales in Japan increased by JPY7.8b or 5.6% from the same period last year.

In overseas market, sales of Dexilant, Uloric and Velcade increased steadily, which absorbed the decline in US sales of Lansoprazole, resulting in an increase in the total overseas sales in the local currency basis. However, due to the significant negative impact of appreciation of the yen of JPY16.1b, the total overseas sales in yen decreased by JPY6b or 3.4% from the same period last year. Next slide, please.

This slide shows changes in consolidated net sales in ethical drugs by region. Excluding the FX impact, net sales on the local currency basis increased in every region. Next slide, please.

This slide shows the sales of five major products. Pioglitazone sales decreased by JPY6.4b. But if you exclude the FX impact, sales increased by JPY2.9b.

Lansoprazole sales decreased by JPY6.6b due to the drop in the US market against generic competitors and the negative impact of the appreciation of the yen.

Candesartan, Leuprorelin and Velcade absorbed the negative FX impact resulting in increase in sales. Next slide, please.

This slide shows changes in operating income. Gross profit fell by JPY3.3b mainly because profit margin decreased by 1.5 points due to an increase of cost ratio according to the appreciation of the yen.

SG&A and R&D expenses together decreased by JPY12.2b mainly due to the yen appreciation and the cost reduction by personnel downsizing in the US subsidiaries last year. As a result, operating income increased by JPY8.9b or 8.3% from the same period last year. Next slide, please.

This shows changes in the net income. In addition to the increase in operating income, non-operating income improved by JPY6.5b from the same period last year due to valuation gains on assets and liabilities denominated in foreign currency. As a result, net income increased by JPY11.5b or 17.9% from the same period last year.

Next slide shows the cash flow. The cash flow resulted in a net outflow of JPY52.8b due to the negative FX impact and payments of income tax and dividend, which are the specific factors during this time of the year in the first quarter.

Please note that the cash flow from operating activities resulted in an inflow of JPY51.6b, increased by JPY12.7b from the same period last year. Next slide, please.

Finally, I would like to explain our forecast for the fiscal 2010 (sic). As shown in this slide, there are no changes from the forecast announced in May this year. We also maintain the assumption of the annual FX rate for the year.

As for the amortization of goodwill, we announced the forecast in May with an assumption that the accounting standards would be changed by the end of June this year and goodwill will be non-amortization assets from the beginning of fiscal 2011. However, the revision of accounting standards by Accounting Standards Board of Japan has been delayed and it was not completed by the end of the first quarter. Therefore, goodwill was amortized in this quarter as before and presumed to be amortized throughout the year in fiscal 2011.

This forecast does not include the impact of acquisition of Nycomed announced May 19th. Full year forecasts reflecting the impact of the Nycomed acquisition will be announced on a timely basis once the acquisition is completed by the end of September and accounting treatment of the acquisition related transaction is determined. This is all from me. Thank you very much.

Next is the presentation from Dr. Ohkawa.

I am Ohkawa, Chief Scientific Officer at Takeda. I would like to discuss our R&D activities with a focus of those during the first quarter of fiscal 2011. This slide outlines my presentation today. Next slide.

To begin with, please allow me to comment on two pieces of news on our DM franchise from the last two months. Firstly, I would like to follow up on the Pioglitazone bladder cancer issue.

In Japan, as we announced in June, precautions regarding a potential bladder cancer risk were revised in the package inserts of Pioglitazone-containing products.

In July in EU, the EMA recommended changes to the label of Pioglitazone-containing medicine based on the monthly discussion at CHMP. The final package insert changes will be recommended by European Commission in a few months and the package insert will be implemented.

In the US, Takeda has been working with the FDA to revise the US product labels. We are confident of the usefulness of Pioglitazone products based on the evidence-based risk benefit evaluation and we believe that the drug will be used properly through the collaboration with the authorities in three regions.

Secondly, I would like to mention the resubmission of an NDA to the FDA for Alogliptin and Alogliptin Pioglitazone on July 25. We believe interim results from a cardiovascular outcomes trial, EXAMINE, satisfy the FDA's cardiovascular safety requirements to allow the agency to complete its review of our NDA and further support the product profile of Alogliptin and Alogliptin Pioglitazone fixed-dose combinations.

The interim analysis results were submitted to FDA ahead of the schedule. The review should take six months, so we look forward to a response from FDA early next year. We are convinced that the data satisfied safety requirements and improves product values. Next slide.

This chart shows the recent stages up in our pipeline after May '11. I would like to highlight some of the main pipeline items. A fixed-dose combination of Nesina and Actos was approved in Japan in July with the name Liovel in Japan.

Also, as I mentioned, Takeda resubmitted two NDAs to the FDA. We submitted NDAs for SGN-35, the treatment of relapsed or refractory Hodgkin lymphoma and relapsed or refractory anaplastic large cell lymphoma.

The NDA submission to FDA of Peginesatide for the treatment of anemia associated with chronic renal failure in adult patients on dialysis was achieved at the end of May.

We have also seen favorable progression in the vaccine area, such as initiation of Phase III study of TAK-816 and Phase I study of TAK-361S.

In the following slide, I would like to feature our initiatives in vaccine business.

In this slide, I would like to introduce our recent initiatives in the vaccine area. We have seen progression in development of two candidates, TAK-816 and TAK-361S.

TAK-816 is a Hib vaccine licensed from Novartis in May 2009 and it is combined with detoxified diphtheria toxin in order to increase immunogenicity assuring the potential to induce production of antibodies in infants. Another feature of this is that it is a liquid form, which can be readily injected.

The prognosis of Hib-induced meningitis is often unfavorable, with subsequent negative outcomes. As it can be fatal, it is critically important to prevent the disease by vaccination.

TAK-361S is a combination vaccine of diphtheria, tetanus and a cellular pertussis vaccine that has already been manufactured and marketed by Takeda with Sabin IPV. Takeda and Japan Poliomyelitis Research Institute entered into an agreement in March 2008 for the sharing of seed viruses for the Sabin inactivated polio virus vaccine and its commercialization by Takeda.

Takeda has been stably supplying pediatric vaccines for more than 60 years in Japan. We will further enhance our vaccine business so that we can contribute to the improvement of the vaccination environment. We also plan to continue the development of various combination vaccines by using TAK-816 and polio vaccines in view of future global expansion of this business.

Next slide.

In the following two slides, I would like to introduce the data of our pipeline at the recent major scientific conferences.

First is TAK-875. This drug is GPR-40 agonist to reach clinical development and studies have demonstrated glucose lowering effects in patients with type two diabetes. It has a great potential to be first in class drug in the market.

TAK-875 works by selectively improving glucose dependent insulin secretion with a low risk of inducing hypoglycemia, which is different from the mechanisms of sulfonylurea or incretin hormones.

The efficacy, safety and tolerability of hemoglobin A1c lowering activity for TAK-875 was presented as a late-breaker at the American Diabetes Association 71st Annual Scientific Sessions.

Results from a Phase II study found that all doses of TAK-875 showed significantly greater hemoglobin A1c reductions at week 12 against placebo and the magnitude of increase in hemoglobin A1c in all doses studied was comparable to that of sulfonylurea.

In addition, the incidence of hypoglycemia was significantly lower for all doses compared to sulfonylurea. The same results were obtained in Japanese and this data shows the potential of TAK-875 as a novel therapeutic option for type two diabetes.

Takeda remains committed to the clinical investigation of TAK-875 in order to further develop the potential of GPR-40. We have thus succeeded in demonstrating a POC. Our efforts, we believe, will lead our product to the market and we plan to have the global Phase III study. And we are working hard so that we can launch the product as early as possible.

Next slide, please.

MLN4924, discovered by Millennium, is a small molecule inhibitor of the NEDD8-activating enzyme, a key component of the protein homeostasis pathway NAE. MLN4924 is currently being examined in Phase I clinical trials. Results from two ongoing Phase I studies with the product in metastatic melanoma and other advanced solid tumors were presented at the 2011 American Society of Clinical Oncology annual meeting. In these studies, MLN4924 therapy shows promising antitumor activity in patients with advanced solid tumors, including metastatic melanoma.

The progress with MLN4924 is a testament to our continued leadership in the protein homeostasis field.

Results were also reported from a Phase I study with first in class MLN4924 at the 2011 European Hematology Association meeting in patients with acute myeloid leukemia or high-grade myelodysplastic syndromes.

MLN9708 is a Millennium-discovered investigational oral proteasome inhibitor being studied in patients with relapsed and/or refractory multiple myeloma. Results from two ongoing Phase I studies with MLN9708 in patients with relapsed and/or refractory multiple myeloma were presented at the EHA meeting. That study showed continued progress and promising results from MLN9708. Response evaluation and combination trials guided by these data are ongoing. We are also committed to actively develop them for earlier launch.

That's all from myself. Thank you.

Before having Q&A session, we would like to have the report by Dr. Ohkawa on the current situation regarding Nycomed acquisition.

I would like to report the current state of the acquisition agreement with Nycomed announced in May. After the agreement of acquisition, Frank Morich, the Transition Steering Committee Chair and the Director of the Board, and Shinji Honda, the Chief Integration Officer, took initiative in selecting Takeda personnel who are specialized in their functions and have knowledge and experience in integration after corporate acquisition to form an integration team. Nycomed management similarly appointed qualified and experienced people to join the integration team.

The period from May 19, or the day of announcement of acquisition, through the closing of acquisition is a period for preparing integration plan, which is followed by its actual implementation. We are now in the middle of the former phase.

The detail of the governance structure will be reviewed up to the time of closing and the integration team is conducting preparations for the integration based on simple principles. The principles include retaining the business momentum of both companies, retaining key personnel and proceeding with integration while taking advantage of each entity's strength.

What I want to emphasize here is that I'm convinced this acquisition will be optimal combination for strengthening the business of both companies and that we will realize this integration smoothly while establishing favorable relationship. Based on the acquisition experiences of Takeda with Millennium and those of Nycomed with Altana, the two companies will work closely and transform themselves into a truly global company with a well-balanced presence in Japan, the US and Europe and emerging countries as a whole.

In the near future, following closing, Nycomed's marketing development and manufacturing bases in emerging countries will be utilized to provide patients and healthcare professionals in such countries with not only the existing Nycomed products, but also Takeda's pipeline. Our corporate value will be greatly enhanced in doing so.

That's all. Thank you very much for your kind attention.

Thank you very much. Now we would like to take your questions.

We have a question and answer session now. (Operator Instructions). After the announcement, start your question with your name and company. (Operator Instructions).

Hello?

Yes, we hear you.

This is Yamaguchi from Citi. The first question is regarding amortization of goodwill by Mr. Takahara. I could not quite understand, so help me to understand. The goodwill was not supposed to be non-amortized. You maintained the numbers as before?

Yes, your understanding is right. When we had the forecast, by the end of June, according the Japanese standards, the goodwill will be non-amortization assets according to the experts also. So we thought there will be -- that goodwill will be non-amortization assets and based on that we had the forecast.

But by the end of the first quarter, by the end of June, the accounting standard was not announced, was not finalized. Therefore, we have the amortization included in the numbers and within this year, whether there will be conclusion regarding amortization of goodwill we don't really know. Therefore, for the forecast of this year, we assume that amortization takes place. JPY14b to JPY13b is the amount for that year and that is included in the forecast. So no change from the numbers we announced originally.

I see. So for the other items, the profit will be revised upward. Is that correct?

Yes, that is right. Expenses we thought will be increased and we try to reduce by JPY14b or so.

Regarding Actos, you explain in France and Germany there were some actions. CHMP action as a whole, there is a gap. I personally think CHMP is right. But going forward, CHMP, FDA regulators in Japan, they have a certain direction. So I suppose there will be no drastic changes. That means there will be no countries like France or Germany following a very strange way.

This is Ohkawa and we feel the same way. In the three regions, risk benefits were evaluated and benefit outweighs risks and that was the conclusion by the authorities. So basically, each market will follow this. But of course, the regulator's opinion by each market may be different. But regarding the conclusion by three regions, we will be talking with respective authorities.

Thank you. Regarding Nesina, my last question, in July, long-term prescription is possible. And in terms of numbers in July, how much sales increase do you see? Just a few comments, please, regarding this.

This is Iwasaki from Product Strategy. From July, long-term prescription is not possible. Prior to July, April, May, average sales, but in June, compared to the previous months, the sales went up four times. In Japan, PPP4 inhibitors work really good, so it's much appreciated by the physicians.

The franchise -- the diabetes franchise can be really utilized in this respect. I hope you expect very well.

Comparing June and July, which is selling better? Well, regarding July numbers, we are in the process of finalizing yet. But, according to the feedback from the physicians, July sales better than the previous month, I suppose. But there are issues of inventory, so I can't give you specific numbers at present.

Thank you. Just one more word. Global data may be missing, or there are some opinions including the microbiological issues. But, regarding efficacy, are there any issues associated with Nesina among physicians?

There are no specific reports or issues. One of the characteristics of Nesina is PPP4 enzymes, so the activity is very high. That is one of the characteristics of this product. Regarding safety, we are very confident.

Thank you very much.

Thank you very much for your questions. I would like to entertain another question.

(inaudible) of Nikkei Newspaper. Can you hear me? Concerning diabetes, I have a question to Takahara San and Ohkawa San, respectively. Takahara San, Actos, the package insert changes, I believe that the direction is already clear. And Actos and Actos fixed, those combinations. Does that package insert affect the long-term sales? And how does that affect the long-term perspective of Actos?

Takahara speaking. For this term, Actos sales, what would be the Actos sales? At this moment, the US sales is as expected, and there has been no significant effects observed.

In Europe, there is a ban of -- stoppage of shipments in France, and it would result in the decline of the sales by several billion yen.

In terms of Japan, we are still in the process of evaluation and assessment. We believe that we have small -- lower sales than originally expected. For the mid-term and long-term, Ohkawa San will answer the question, please.

Okay then, I will ask the question to Ohkawa San. In addition to the long-term and mid-term perspectives, I would like to ask you the following. The mechanism seems to be very favorable, but what is the significance of having another diabetic drug to the market -- to the franchise? What is the significance of having the new drugs and new franchise in diabetes?

First of all, talking about the prospect of sales of Actos, we have a combination drug, or fixed combination with Pioglitazone, resulting in a more potent efficacy. And we can have an expected protection of pancreas and pancreatic function and it seems that we can get an approval earlier than expected. So maybe the doctors can use it and the doctors and patients can feel the effects of this combination drug, and it would be very favorable for the sales.

For 875, TAK-875, from the beginning of our development programs we have had a high expectation, because this is the agonist discovered by ourselves. It has a potent effect and, like SU, it doesn't cause hypoglycemia, and so it can be the best in class and it can replace SUs, and we can have a further expectation for the future.

I would like to ask you again so you have --- do you think you have a first in class diabetes drug in the market?

In terms of the efficacy, there still remains some unmet needs and not everyone is satisfied. For example, the pancreatic function, whether the pancreatic function can be recovered or not should be further explored. And also, not only to reduce the blood glucose, but also we have to take into consideration the prevention of the final outcome like reduction of the body weight. So we have to have additional benefits in addition to the low range of HbA1c. So this is the room for the TAK-875.

Thank you.

Next question, please.

Mr. Urushihara, Nomura Securities.

Hello. Urushihara speaking.

Yes, we hear you.

I have three questions. In the Nikkei there was an article on the balance sheet you have a higher level of borrowing. Regarding the numbers that you manage, are there any changes? The FCF calculation, for example, there is expected return that could go down. Maybe you have other indicators that you use for management? Those indicators could be influenced because of the higher level of borrowing?

This is Takahara speaking. As you mentioned, the borrowing is about JPY600b, a bit less than that. And once number on calculation will go down? We use -- we are now changing our calculation regarding return on investment for the borrowing. As we always explain, we can repay over five years, so this is one-time event, one-time influence on the balance sheet, and that is why we don't change our calculation.

As you say, you pay over five years. The first year is short-term borrowing, but, for the other years, you will be issuing debts because of the repayment of this, is that right?

For the first year, bridge financing, yes, so that will be a short-term borrowing. And, in the Nikkei article, I think interest payment was JPY10b. It's not so high. One-quarter, or one-fifth of that amount, that is our expectation.

Then, issuance of debts, corporate debts, that is one of our options. But, whether permanent finance by issuing debts or by borrowing, we have not the final answer yet, so give us a bit more time, please.

Thank you. The second question, TAK-875, this is Phase II completed. You are starting Phase III. What's the target patient in the diabetes? A substitute of SUs that was mentioned by you, but are you thinking of diabetes naive treatment patient or early stage of diabetes?

As the patient profile, substitute to SU, in Japan, SU is the first line, so, as a replacement, we hope to be the first choice. But diabetes paradigm is different by each market.

In the US, Metformin is the first line in the US. Maybe after Metformin for this compound. But, depending on the potential, we can expect some upside. So, based on clinical results, we will pursue various possibilities.

Regarding that, I have two more questions. (inaudible), what do you do in future? And, in China, is this going to be one of the drugs that you simultaneously develop globally?

Including China for 875, this is a global item. That is our plan. And, for China, we are focusing very much. And, in terms of number of diabetes patient, it is very big and it is going to grow very much. Therefore, we will be very active. So, it is globally simultaneous development, yes.

(inaudible) in Japan, when 875 is marketed, what would happen to (inaudible)?

This is Iwasaki speaking. Regarding (inaudible) and 875, the differentiation, maybe you do something different regarding (inaudible). Well, 875 is still at the beginning stage of Phase III, so, regarding position of (inaudible) and the differentiation of each compound, it's not really finalized yet.

The third question is Actos PI revision by the regulator request. In Europe and US, you have issues that you consulted. And you think it's going to be over maybe next year, additional revision, or do you think that's it for this year, with the current round of talks?

Well, in three regions we are talking with the authorities regarding the revision of PIs. And basically, for the time being, risk benefit, when that is considered, then benefit outweighs the risks. And then epidemiological result will come out, then evaluation will be done again for further action. That might impact our future course. But, for the time being, we do not expect another round of revisions very soon.

Thank you very much.

Thank you very much for your question. Next question, please.

(inaudible) from Barclays Capital Securities.

Nesina, in the States, in Oko San's question, it would add the new values, and it can have a good evidence. But (inaudible) has a reduction of the CB risks. And the CB risk reduction, your product is not the only product which would reduce the CB risk, so, would you please comment on the differentiation with competitors' products?

Fundamentally speaking, we have to evaluate the safety after the drug is introduced clinically and commercially. And we conducted outcome study, and we have a clear data. And the data is not available for disclosure at this moment, but it would ensure the safety of the product.

And also, Actos fixed-dose combination -- fixed-dose combination with Actos is very valuable, and we are the first in the market -- first in class, so it would provide a big benefit to the patients.

Thank you.

Another question. 875 has a very clear data, and we don't -- I think it will satisfy the unmet needs in diabetes. There are other competitors studying in India, and we don't see any other information. We hear that someone is working on that, but we don't know whether they would go on in their clinical development. We cannot comment on that. But, as far as we are concerned, we would like to put some product as a first in class in the market. And, as you said, the clinical data shows proof of efficacy and the advantage in side effects. So, we would like to provide this drug to the patients earliest in the market.

And it would reduce the body weight, as well?

This is something we have to confirm and evaluate in the Phase II trials.

Thank you very much. That's all from me.

Thank you very much. Next question, please.

From [KDC Securities], Mr. (inaudible).

This is (inaudible) speaking.

We hear you alright.

Just for confirmation, I have two simple questions. In the beginning, amortization of goodwill you mentioned. In May, you announced mid-term plans except for operating income. That is excluding amortization JPY40b operating income, and that is excluding JPY15b for amortization?

This is Takahara speaking. Yes, your understanding is right. Of course, it goes without saying. But, regarding goodwill, we have IFRS and US standards that you don't amortization. And the Japanese rules are behind those countries. But, in future, the Japanese standard will be in line with the global standard, and we have that expectation. Thank you.

Nycomed consolidation, when that is ready, you are thinking in parallel? Maybe the standard is not catching up, so what is your approach?

Well, we are following the Japanese accounting standard, naturally. Therefore, at the point of the Nycomed acquisition, if the Japanese standard is amortization of goodwill, we need to follow that. That's my thinking. Thank you.

Another question, Actos. CHMP in Europe is requesting epidemiological study according to the press release. What kind? Is it requested or is that ongoing?

Epidemiological study is ongoing. By 2013 the results will come out.

So that does not impact Actos' lifecycle so much, if it is 2013?

In relation to patent, well when we provide, of course, we need to make sure that we provide safety as well. So we want to make sure that it is safe.

What's the scale of the study?

We can't disclose that. In Europe -- the study will be conducted in Europe. The study is in the US.

I see, in US. Thank you very much.

Thank you very much. Next question, please. Hello?

Considering the Actos patent I have two questions. In Japan, you have the -- there is no patent rebuttal. However, it may affect the settlement in the US?

Ohkawa Speaking. No effect on settlement. The US settlement has been completed.

And no other companies are going to challenge you?

Yes, it is what we understand at this moment.

What about the suit, or the trials in Japan, concerning Actos? What was the lawsuit in Japan?

There is Mr. Okumura with us. He's from the Intellectual Property department, and Okumura San is going to answer this question.

I'm Okumura, of IP department. And your question is related to the Japanese cases. And there is a local Court in Tokyo and Osaka, and there are 10 and eight generic companies, so, in total, 18 companies. However, the trial is not in progress yet.

What about the loss compensation -- compensation of the loss? Next year, you would have a 10% discount in NHI price. So can you claim for the compensation?

No. It is to be decided. At the end of the trial, we have to scrutinize what kind of losses will be there, so we cannot make any comments at this moment.

Taking example of the past cases, what is the possibility or probability -- what is the scope of compensation? What level of compensation is pursuable?

The scope is difficult to determine at this moment, so I cannot answer your question now.

Thank you very much. So, at a certain point in time I may ask the same question to you in the future. Thank you.

Thank you very much. Next question, please.

From [Franke] Newspaper, Mr. [Hugiwara].

My name is Hugiwara from Franke Newspaper.

Yes, we hear you.

I have two questions. After the quake, March 11, what's the impact of the quake on the first quarter?

This is Takahara speaking. The impact of the earthquake in March, on terms of P&L, we really have little impact, minimal impact. For FY2010, as I have explained, facilities and buildings have damages and repair by JPY350m, as I recall. And support managements and including all that, total JPY900m. But after that, for this year, the support, or aid, [Alynamin] -- one tablet piece of Alynamin sold, JPY1 donation. That is decided already. One tablet, JPY1. So it would be about JPY800m.

Thank you. In the Kansai area, power saving request is getting stronger, and you have headquarters in Kansai and also a plant. What's the impact of that kind of power saving request on your operation?

Inoue speaking. In Tokyo area and also in Osaka area, 15% cut is the saving target. At least 10% can be achieved. That is our forecast.

Specifically speaking, what are you doing? What are your specific actions?

This is Ohkawa speaking. Well, I am in charge of research. At Shonan research, we have thought of lowering our power outage, and also saving power. We save power in the areas where there is little impact on our operation. We are talking about lightings and the air conditioning. And also, for experimental facilities, we use power and we have savings by suspending some parts of our consumption.

Thank you very much.

Thank you very much. Due to the time constraint, the next question will be the last question for today.

Hello? This is (inaudible). Talking about the dividend, the annual dividend expected is JPY180. From next year -- next fiscal year and onward, as you mentioned, you have some temporary borrowing. So what about that dividend range? Do you change, or are you going to change, some plan for the dividend from next fiscal year?

Takahara speaking. Concerning the dividend, in the mid-term plans from 2011 to 2013, we have promised the shareholders a dividend level of about JPY180. We have no intention to change it. It is true that we have temporary borrowing, and we have to return the borrowing. And some people may say that we have to prioritize the return repayment of the borrowing but, in our Company, from '11 to '13, we would like to maintain the level of dividend at JPY180. And we have to make a strategic investment, and borrowing -- and the repayment of the borrowing is made as a strategic investment, and there is no change to be made.

Thank you.

Thank you very much for your discussion. This continues (sic) the conference call of first quarter financial results of fiscal year ending March 2012. Thank you very much for your participation, and I would like to have your support in the future as well. Thank you.

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.