Takeda Pharmaceutical Co Ltd (TAK) 2013 Q1 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 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 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 listening mode only, and the questions and answer session will be held after the presentation. This conference call is being broadcasted through the Internet on live, but only for listening mode. Now, we start the conference with the presentation.

Thank you very much for joining Takeda Pharmaceuticals conference call for the first quarter FY2012. My name is Ohtsuki from Corporate Communications. I will be facilitating today's conference call.

Today, we have presenters in the panels here with us. Mr. Iwasaki from Pharmaceutical Marketing Division, Mr. Honda from Corporate Strategy Department, Mr. Takahara from Corporate Finance and Controlling Department, and Mr. Miyoshi, Head of CMSO Office.

First, we will give you an update for the financial overview for the first quarter FY2012, followed by update of R&D. And after the presentations, we will have Q&A session. Please refer to the presentation materials as needed.

First, Mr. Takahara will start presentation.

I am Hiroshi Takahara, Senior Vice President in charge of Corporate Finance and Controlling. I would like to report our consolidated financial results for the first quarter fiscal 2012.

This is the consolidated summary for the first quarter FY2012. The sales were up JPY41.1b or 11.5% year on year, to JPY398.3b. Operating income went down JPY53.6b or 46.2%, to JPY62.6b. Net income was up JPY12b or 15.8%, to JPY87.6b. Let me explain more in detail, using the following slides.

This shows changes in net sales by business segment compared to the same period last year. For the domestic ethical drugs, contributions from new products such as Nesina and Azilva could not offset a decline in existing products such as Actos and Blopress, and the sales went down by JPY2.7b.

For overseas, excluding the acquisition effect of Nycomed and URL, decreased sales of Pioglitazone and Candesartan, along with the negative impact of the yen appreciation in the western market, pushed down sales by JPY37.5b. But Nycomed, acquired last September, boosted sales by about JPY77b. And URL, acquired June this year, added another JPY3.9b. Thus, the total overseas ethical drug sales went up by JPY43.4b.

Next slide, please. This slide shows changes in sales by product. Pioglitazone was down JPY37.3b. And other mature products such as Candesartan, Lansoprazole, Leuprorelin were also down from the same period last year. But Velcade from US Millennium was up JPY3.5b, and sales of products launched since '09 such as Nesina and Azilva were up by JPY11.5b. Additionally, sales increases from Nycomed and URL marked all together JPY80.9b. All together, sales were up JPY41.1b from the same period last year.

Next slide, please. Let me explain sales of ethical drugs by region. By the acquisition of Nycomed we have expanded our business platform in Europe and emerging markets, leading to expanded sales in Europe, Asia, Middle East, Africa and Oceania. In Americas, in spite of the decreased sales in US, we managed to have only a slight decrease thanks to stronger Latin American business. Excluding the FX, the sales in this region showed net positive results.

Next slide, please. Our current mid-term plan defines emerging markets as a growth driver, and this slide shows our sales results in the emerging markets, which includes Latin America, Russia, CIS, Asia, Middle East, Africa and Oceania. Thanks to the Nycomed acquisition, the sales grew five times to JPY48.6b in these markets, more than 13% of the total ethical drug sales.

Suppose Nycomed had been consolidated in the same period last year, Q1 sales of emerging markets this year would have marked a slight decline year on year because of the negative impact of the euro depreciation of about JPY5.8b. But excluding the FX impact, the first-quarter sales would have been an increase of 11% year on year, demonstrating a steady growth on the local currency basis.

Next slide, please. Let me explain changes in operating income. Although the sales increased by JPY41.1b, because of the change in the product mix such as less contribution by Actos with high profit margin, the gross margin went down by 3.9 points, and the gross profit was up by just JPY16.7b.

For SG&A, amortization of intangible assets and goodwill increased by JPY16.7b, and Nycomed acquisition led to more expenses in Europe and emerging markets. Thus, SG&A expenses increased by JPY49.1b. For R&D, thanks to steady progress of the late-stage projects, the spending was up JPY21.2b. As a result, operating income was down JPY53.6b or 46.2% to JPY62.6b. Excluding the special factors associated with M&A of about JPY33.2b, operating income was down JPY36.4b or 27.5% to JPY95.8b.

Next slide, please. This shows the change in net income. As I said, operating income was down by JPY53.6b. We received a tax refund of JPY57.2b related to the transfer price tax, of which interest on the refund of JPY11.6b was posted as extraordinary income. And the refund portion of JPY45.6b was recognized as a tax item, which pushed down the total tax amount for the quarter. There was an extraordinary loss of JPY2.1b for the overseas restructuring costs.

As a result, net income was up JPY12.0b or 15.8% to JPY87.6b. Excluding extraordinary income/loss and extraordinary factors of about JPY26.5b, net income was down JPY25.8b or 29.7% to JPY61.1b from the same period last year.

Next slide shows the cash flow. At the end of the first quarter, operating cash flow was JPY104.1b. For acquisition of URL, payment for acquisition of subsidiaries' share was JPY60.9b. Dividend payout was JPY61.0b and FX negative impact was JPY17.3b. All together, the first-quarter cash flow was net outflows of JPY74.4b.

As I explained in May, even with about JPY300b R&D investment for sustainable growth, we expect JPY250b to JPY300b level of positive annual operating cash flow, which will enable steady repayment of debt and stable dividend payouts.

Next slide, please. Lastly, I will explain forecast for this year. Our FX assumption was revised to JPY100 to the euro, compared to JPY105 to the euro announced in May. This will have a negative impact on the sales, but we expect that this can be absorbed by sales contribution from Multilab and better than expected sales performance of Actos and Velcade in US. Impact of the euro rate revision on the profits is expected to be small. Therefore, we will not change the forecast for this fiscal year announced in May.

This is all for my presentation. Thank you.

Next is a presentation from Mr. Miyoshi.

I am Miyoshi, Head of CMSO Office. Let me provide the update related to our R&D activities. Here is today's agenda.

Before going into each topic, let me briefly explain the resubmission of Alogliptin in US. Following receipt of the CRL in April, where FDA requested additional data, Takeda resubmitted NDAs to FDA for Alogliptin on July 26, and fixed dose combination, FDC, of Alogliptin and Pioglitazone on July 27 in the US time. Takeda responded to the FDA promptly with significant new data from our ongoing clinical trial program and updated post-marketing data from outside US.

We anticipate that these applications will be reviewed within in the next six months. We believe the information included in the NDAs resubmissions for Alogliptin and the FDC of Alogliptin and Pioglitazone will address the Agency's request for additional data.

For the first topic, let me introduce the recent stage-ups. Rienso, a new intravenous iron therapy, received European marketing authorization for the treatment of iron deficiency anemia in adult chronic kidney disease patients. MAA for Alogliptin was submitted to the EMA.

As for MLN9708, Phase III clinical trial has been initiated in patients with relapsed or refractory multiple myeloma. Regarding lifecycle management, we have started Phase III clinical trial for TAK-375 sublingual, for the treatment of bipolar disorder in the US.

In addition, I will briefly introduce the new Phase I compounds in the upcoming slides. Although not written on this slide, let me introduce the current status of Revestive.

In June, the Committee for Medicinal Products for Human Use adopted a positive opinion for Revestive for patients with short bowel syndrome. In July, CHMP has issued a positive opinion for conditional approval of Adcetris for two indications. In other markets, Daxas was filed in Albania and Saudi Arabia, while FDC of TAK-491 and Chlorthalidone was filed in Taiwan and Thailand.

Next slide, please. I am going to tell you about our progress in later stage of pipelines of oncology. The next slide shows our recent presentations to the annual meetings of American Society of Clinical Oncology held in June this year.

Regarding TAK-700, a selective androgen synthesis inhibitor, we are conducting Phase III clinical trials to evaluate its safety and efficacy both with steroids to file in US, EU, Japan in FY2013. We presented the updated results from our Phase II study of TAK-700, both without prednisone in patients with non-metastatic castration resistant prostate cancer and rising prostate-specific antigen.

This study showed 16% of patients experienced undetectable levels of PSA at three months and 32% experienced undetectable levels of PSA as their best response. These results show that TAK-700 reduces PSA without the need for concomitant corticosteroids. We are reviewing our development strategy to gain approval for use in broader range of prostate cancer patients.

MLN9708 is a proteasome inhibitor, which is same class of Velcade. The feature of this compound is to be effective by oral administration. We are trying to file in US, EUR and Japan in FY2014. We also presented the results from several studies of MLN9708 at ASCO. However, we introduced here a Phase I/II study in patients with previously untreated multiple myeloma.

In this study, of the 46 patients who completed more than four cycles of therapy, the overall response was 98%. 26% achieved a complete response, with 20% of patients achieved a very good partial response. Informed by the data from these studies, we have initiated Phase III trial which will investigate MLN9708 in patients with relapsed or/and refractory multiple myeloma.

In oncology area, one molecule has entered into clinic in patients with advanced GI malignancies, which is MLN0264. MLN0264 is an antibody drug conjugate targeting GCC, consisting of human monoclonal antibody linked to the potent microtubule inhibitor monomethyl auristatin E, MMAE, via a lysosomal protease cleavable linker.

GCC is a receptor localized to the apical, but not to the basolateral membrane of intestinal epithelial tissues, primarily in the colon. Malignant transformation results in GCC expression in the basolateral membrane after administrated by IV injection. MLN0264 is anatomically not able to reach GCC expressed in normal intestinal epithelial tissues. However, it is able to access to GCC on extra-intestinal epithelial tumor cells.

MLN0264 is internalized into GCC expressing cells, where the MMAE payload is released by lysosomal proteases leading to apoptosis. By its unique and novel mechanism of action, MLN0264 delivers very important microtubule inhibitors selectively to malignant tumor tissue. It is therefore a highly targeted therapy that holds the potential to become a safer and more effective treatment alternative, which will be expected to meet the unmet medical needs of patients with advanced GI malignancies.

In CNS, I can introduce four stage-ups. TAK-375 sublingual started up to Phase III. This drug is MT1/MT2 receptor agonist, and it has a target indication for bipolar disorder. This is sublingual formulation of Rozerem, a novel therapy for acute depressive episodes and a maintenance therapy by treating abnormalities in circadian rhythms which are prominent in bipolar 1 disorder. Clinical study demonstrated high efficacy and favorable safety/tolerability in BP maintenance.

TAK-357 entered into Phase I. This drug is cognitive enhancer with sustained symptomatic benefit, and a target indication for Alzheimer's disease. It reduced the deficits that occur in AD animal models in both brain glucose utilization and in the performance of novel object recognition task.

TAK-063 entered into Phase I. This drug is a PDE10A inhibitor, and a target indication for schizophrenia. Enhancement of signaling pathway downstream of Dopamine 2 receptor improves positive symptom of schizophrenia.

ITI-214 entered into Phase I. This drug is a PDE1 inhibitor, and a target indication for cognitive impairment associated with schizophrenia. Amplification of Dopamine 1 signaling restores cognitive impairment. Restoration of imbalance of D1/D2 signaling ameliorate EPS caused by antipsychotics.

NDA for Lu AA21004 and MAA for Lurasidone are planned in 2012.

In addition to our Phase III compounds, the progression of the compounds I have introduced today will strengthen our pipeline in the core therapeutic area of CNS, and we will continue to actively pursue development in this area.

Thank you for your kind attention. Now we would like to entertain your questions.

(Operator Instructions).

Hello?

Yes, we hear you.

Yamaguchi from Citigroup. The first question is about SYR-322. You submitted data, you said. And FDA received the data already, or it will still take time for the FDA to actually receive the data for resubmission?

As I said, last Thursday for mono and Friday in local time US Actos fixed-dose combination data was delivered to FDA.

So that means they will respond to you that they have had the receipt, they will communicate that to you?

Well, it's normally said it would take about two weeks, but actually one month would be required. Then PDUFA date will be officially notified.

Well, you expect six months for the review period, and sometimes three months may be a possibility?

Well, two months or six months. There was two possibilities. And we think it's going to take six months.

That is your expectation?

That's probably more likely, that's right.

And the second question is about domestic sales, rather sluggish in domestic in terms of sales, 1.7% down in sales, although (inaudible) new products. But I thought for the annual expectation 3%. What's the reason for the sluggish sales in Japan?

And Nesina, although it is growing, but it seems like that you are challenged -- you are being challenged against the budget or the plan. What is your take on this?

This is Iwasaki. Regarding the growth of sales being a bit slow, that's true. And INN prescription system is a factor in generic, a switch is growing. And the numbers, as you mentioned, we have new products and we are going to focus on new products launching. So later this year we expect more growth, so for the time being we think that we can achieve our plan.

As for Nesina, as you said, it's sort of challenging, yes, because there are many competitors' products in the market. But in June we are able to prescribe for long term. And before and after June, I am sure you are following the numbers. Since the June we have much better growth. So as of now, we think we can achieve the plan.

Thank you. And lastly, about Nycomed, 11% growth in sales on local currency basis, but that is at constant exchange rate and tracking may be difficult. But in terms of profit, what's the situation? Excluding special factors, are just as good as last year or better than last year?

This is Takahara. As you know, after April, legacy Nycomed and legacy Takeda have integrated various businesses in each country. So in operating profit level what's the situation for the legacy Nycomed, we don't have that detailed data.

So, excluding that, in terms of emerging markets, better profit margin or the trend, good profit growth, do you see that?

In yen basis or local currency basis, that may be a bit different. But local basis, local currency basis, that's euro, and in euro sales growth is in synch with profit growth. So that means an increase in sales, an increase in profit. That's the trend.

And you don't really know whether it is a double-digit growth or not?

The profit level is quite in synch with sales growth.

Thank you.

We would like to move on to next question.

Thank you. I am Muramatsu from Nikkei Newspaper. Can you hear me?

Yes.

It relates to the previous questions. I have a question to Iwasaki-san, and another question to Mr. Honda. First, my question to Mr. Iwasaki. You talked about the launch of new products in domestic markets, so where you are currently focusing on. And regarding Nesina, you have already explained. And well, it's just started, the Azilva, but Reminyl or other new areas which will lead your future sales businesses, could you share with us your idea?

Reminyl, the competitors' product is also launched at the same time. Therefore there are challenges. However, it would be a comparison against other companies. Therefore, we have to be cautious to express our ideas. And if a patient cannot be treated well with other products, but using Reminyl is found to be effective, there are such cases in many. And under severe competition, I think that we have been observing favorable situations.

So is it doing well, do you think?

Well, I think it is about to start. I mean that physicians, after they use to some extent, then they will really start up. Therefore, as long as looking at mechanisms or the strengths or weaknesses, well, you may consider that it's similar to others. But in the case of Alzheimer disease patients, well, I think everyone or physicians know that this is something which cannot be covered by a single product. Therefore, there is a chance we'd be willing to use other drugs. And so far, based upon their experiences, they have favorable impressions. That is my impression too.

And what about Vectibix?

In those accounts which didn't adopt the Erbitux, Vectibix has been growing. Therefore, I think from our viewpoint it's been performing well.

So in both cases your views are positive, is that right?

Yes. Especially Vectibix, yes, we have a positive view. And regarding Reminyl, as I told you earlier, it will be assessed in more full-fledged manner. But at the start-up, as long as we listen to the external audience, we believe that it's quite positively accepted, although in this area usually it takes a little more effort.

Now I'd like to ask a question to Mr. Honda. Regarding the Chief Integration Officer of Nycomed, you had this position previously. And now I think that Nycomed's contribution to sales is now visible, more or less. And in terms of integration in terms of the HR optimizations or any other current issues that you need to see more improvement, what are the areas specifically?

Honda speaking. Regarding integration with Nycomed, it's been progressing as planned, in my feeling. But compared with the original plan, so far, as I told you repeatedly, even more smoothly we have been progressing. So-called IT system is an exception, because it takes time. But other than that, regarding the HR, personnel, in Europe in total about 2,400 people are there. And the major countries like Germany, France and Italy, which account for about 60% of the total, together with the local works council we have been steadily progressing negotiations.

Therefore, in the sense of restructuring, we do not have much concern. There is -- we have such a sales distribution system in our hands. Therefore, as a new revenue opportunity in the markets or countries where Takeda didn't have a presence, how can we grow the sales, and that's key. And of course we need to make a filing to the authorities in local countries to get an approval, and allocating resources in our development areas as well.

So we have to have an integrated approach, including which product we should go at the beginning in each country. And we have set an integrated mindset, to make a plan of filing. And as long as I look at the situations, I think that things are progressing smoothly.

And in emerging countries you may ask this question that in India, China there are some disturbances reported today. And business wise they are attractive, but there are risks as well in these countries. Therefore, as a part of the BCP, business continuity plan, we have to have risk preventive measures as well as a risk management plan. But other than that, I think everything is going quite smoothly.

As it's asked before, well, I think it's difficult to give some quantitative assessment about the Nycomed contribution benefit to Takeda. Could you comment how much contribution is made so far?

Well, it's difficult to give you a specific number, like how much add-on to sales and profit. But for one thing, emerging markets are the growth drivers for us compared with advanced countries. Their market growth is strong and they will be supporting our businesses in the future. And in fairly established manner, we could acquire those business operation systems.

In particular in Russia and Brazil, I had the firsthand opportunities to look at those situations. And well, there are excellent leaders, and viewing those leaders we'd be able to tell how we will be also going forward. And we could have fortunately very excellent talent in that sense. I think it was quite valuable for us.

Next question, please.

From Nomura Securities, Mr. Urushihara.

Hello. Yes. I have three questions. First, I am asking this all the time, but Nycomed; Nycomed covers the markets and in those markets maybe tendering is not really working very well. Do you experience that? That's the first question, tender offers in some countries covered by Nycomed.

This is Honda. You said there are three questions, so maybe you can address three questions all together now.

My second question is to Mr. Iwasaki about new products. This year, 087 and Pfizer's product, and regarding the sales strategies what is your plan?

And TAK-875, US enrolment of 2,610 is the target and what's the progress so far?

Thank you very much. Mr. Honda, go ahead.

Well, Nycomed territory and tender situation, and you are wondering if there are some unsuccessful cases. Well, my answer is simple. As of now, we are not really facing extra difficulties, as far as I know. So, no particular concerns.

So, you think you are winning the tenders that you planned to achieve?

Yes. From our original plan, there is not much gap or difference in terms of gaining the tenders.

This is Iwasaki speaking. Tofacitinib, Pfizer's item, and we can't really communicate on our own. I hope you understand. And this is true for TAK-085. We can't really say that we are launching for sure this year. I can't really say that. And I hope that you will be patient.

But I heard that MRs' education has started already in these weeks. Maybe you have a permission to start training?

Well, I -- we are sure that we will be able to get the approval. And for the strategy of 085, in the next quarter's update we can provide you more information. We are trying to finalize various plans as of now. We can't really disclose details.

But for TG, triglyceride, treatment there is no consensus among the physicians. That's my understanding. But for sure, to lower triglyceride is a merit, and that is becoming more evident. So we are almost like establishing a guideline. In that way we can introduce products. How, regarding how, please give us a bit more time. We don't have our internal plans finalized yet.

Pfizer's CP product is reflected in your plan for this fiscal year, or it's not included? Or that is not quite disclosed?

My last question are -- this is Miyoshi. And TAK-875 and the progress of development, I don't have detailed data as of now. But things are moving very smoothly, that's for sure. So, by 2015, in US and Europe submission will be possible.

So you have on board about half of the target of 2,600 enrolment?

I can't say clearly now, but we have three or four studies and that is to be completed October 2015. And that plan is going very well. That trial is also moving smoothly. So, as of now, there is no change in our plan of submission timing.

Thank you.

I'd like to go on to the next question, please.

Hello. I have three questions, though first I'll start all the questions. My first question is this [former western] conference call, listening to that, regarding European prices I think comments are made. Given your presence in Europe, from April through June did you see any impact from the price reductions?

And also, whether or not -- even qualitative information is okay, but if you can share whether or not there is any prolongation of the recovery or collection side, please share that information with us.

And the next is about the R&D expenditures. In Takahara-san's presentations, you said that the later-stage development has been progressing very well. That's why the R&D expense is expected to grow. But could you give us more specific information?

And then, the TAK-700, according to Iwasaki-san, you want to get the indication for a wider range of prostate cancer patients, because it seems to be effective without the steroid. So could you discuss that as well?

Honda speaking. Regarding your first question about the pricing in Europe and its impact in the period from April to June, I haven't heard any particular impacts incurred. There is a site extension, due to the euro crisis in Europe. I investigated that, and actually the site itself is extended, especially in the case of Europe. In public hospitals like Italian public hospitals, to -- the accounts receivables, it seems to be taking a little longer time.

And Nycomed, the one thing excellent is that they cover so many emerging countries. Therefore, there is insurance coverage regarding the credit. Therefore, this program can be adopted, and in that way we will be able to hedge any negative impact.

Thank you. And regarding the R&D expenditure, would you please, for a moment?

Takahara speaking. It is true that the R&D expenditure, in the first quarter spending was accelerated. The reason in the background is that centering around the later-stage pipelines R&D, especially the development expenditures, were spent.

SYR-472 and TAK-875 and TAK-438, regarding those products, Phase III in Japan, the clinical trials started last fall. And regarding TAK-875, last October, in Europe and America we started Phase III trial. And also, TAK-700 and MLN8237 and MLN9708, those oncology pipeline compounds also showed stage-ups or the progression of the enrolment of the patients in clinical trials. And TAK-700, from this January, Phase III clinical trial in Japan started. And MLN8237, from March, the Phase III clinical trial in Europe and America started.

So, we continue making efforts with funding to promote those stage-ups. Therefore, whether they are on our original plan, all those activities are accelerated.

So the current estimate for this fiscal is the JPY295b, but do you think it's getting more than that?

Well, R&D's estimate is actually JPY310b, and we think that level we'd like to finish. Therefore, we have been controlling.

Miyoshi speaking. Regarding TAK-700, your question, as you know and as I told you earlier, the first indication is hormone resistant metastatic prostate cancer, but even without the steroid it seems to be effective. Therefore, no metastatic patients that is early-stage patients and the patients who cannot use steroid because of hypertension and so on, there could be a wide range of patients who can benefit from this compound. Therefore, we have been now currently considering to design and implement the clinical trials for non-metastatic patients.

Next question, please.

From Credit Suisse Securities, Mr. Sakai, go ahead.

This is Sakai. Yes, I have two questions. Adcetris is the first question. That is an orphan drug in Europe. There is conditional approval of marketing, right? And how this product is going to be sold in Europe or this was from Millennium Seattle Genetics. And how do you market this product going forward, and what are the steps that you are going to take? If you have specific plans, please share with us. So that's the first question.

And the second question, for CNS area, Mr. Miyoshi introduced some of the projects, and for Takeda the therapeutic area of CNS was introduced in the presentation. That means you are going to focus more, or you have Rozerem for bipolar. It's an old drug that you had. And regarding that, I think sales is getting more difficult. So how do you plan to sell this? Any changes in strategies? Those are two questions. Thank you.

This is Miyoshi. First, about Adcetris, for the sales in Europe Takeda will be selling on their own. Seattle Genetics is covering US. And other than US, Takeda is the distributor.

And conditional approval, this is the agent for unmet medical needs. And in those cases, Phase II data may be sufficient to approve a compound, sometimes. And that means that the European authorities recognize that there is a high unmet need and high expectation on this agent. We also have high expectation. Well, there are other indications being considered.

And what about those other indications? You will talk with EMM or CHMP? You will discuss for other indications? What's the outlook?

Well, at this time, this is for Hodgkin lymphoma refractory and relapse, or a systemic anaplastic large cell lymphoma. And those are the two indications and approved. And now, Phase III and autologous stem cell Hodgkin lymphoma and also other indications such as first line for Hodgkin's and relapsed cutaneous T-cell lymphoma. And we will negotiate with the regulatory authorities, so that all those indications will be approved eventually.

This is not reflected in your forecast for this year, or I don't think a contribution would be so big.

That's right. There are a limited number of patients, and for this fiscal year we do not disclose any particular specific contribution from this product.

Regarding CNS?

Rozerem you said is an old medicine that we are shedding spotlight once again, and that's very good. We find new indication to address unmet needs of the patients. And if that's the case, we would get it from wherever.

But how much focus do we pour on CNS? That was also your question. Alzheimer and there are other diseases with unmet medical needs, and that is one of our top priority therapeutic area.

So, quite often biomarkers or animal models may not work for CNS. So, in that sense, do you have any strengths in this area?

TOMM40 is the biomarker project that we have with Zinfandel, so we will further promote collaboration with other partners. We will identify what we need and try to address that and develop agents.

You don't think that we can go alone?

It's not -- we do not limit ourselves that way. We will think of various options and partners, so that we can deliver products for the patients with unmet needs.

Did you say TOMM40?

Yes. This is from Zinfandel company, company called Zinfandel, and that's the biomarker's name; it's called TOMM40.

Let me check the data here. For Alzheimer's disease, are you talking about this animal model?

No. This is a biomarker, within five years, of those with higher risk of Alzheimer being developed in five years. And with this biomarker, you may be able to identify those people with high probability of developing Alzheimer's disease. And we target those people and we will enroll them in the clinical trials, and that will give us a better probability of success.

Is that limited to 357?

No. Regarding TOMM40, we can use this for other agents, and that's how the agreement is made.

Okay. Thank you very much.

Now we are running out of the time, so we'd like to now receive the last question please.

Hello. Thank you. I'd like to ask a question about OMONTYS, anemia treatment drug in the US. Could you give us update? And Colcrys, I think you just started your activities, but what about its impact into Uloric?

And Velcade and Actos, you have been saying that the performance seems to be going better than estimate. Could you also give us update?

Honda speaking. So now I'd like to talk about OMONTYS. In the US, on July 11, with Fresenius we agreed the contract to supply OMONTYS that's announced. And in the first pilot trial, in about 100 sites, there is centers taking several weeks. We will start using this. And based upon that result -- this is a one thing -- one-month dosing regimen drug. That is characteristics of this drug. And on this pilot program, efficacy and also the cost benefit or advantages coming from the once-monthly administration will be verified.

And in the large-scale dialysis center like LDO in the US, large dialysis organization, there are two sites, DaVita and Fresenius. In those centers, our product is actually adopted. That's quite meaningful. Therefore, first with Fresenius we'd like to succeed in our first pilot program.

And regarding the Colcrys impact onto Uloric, no synergistic effect was expected. So in short run and also mid and long run, we'd like to see the treatment efficacy. But it's just started. Therefore, Uloric sales force will be detailing progress together in the future. And in detailing activities, of course, they should be able to explain both products. And in that sense, I think that the upside impact can be expected for Uloric. And so we'd like to take this opportunity efficiently and effectively.

And how about Velcade?

Takahara speaking. As for Velcade, as I told in my presentation, it's performing very steadily. In a data basis, compared with last year's first quarter, about 27% up is the result so far, so more than expected. There were larger needs. And in the first line therapy, the sales account for 40% to 50% of the total sales, and it's been leading the market of multiple myeloma treatment.

Regarding Velcade, at the front line of multiple myeloma the sales proportion is 50% and the second line 45% and then third line 20%, and also multiple lymphoma it has a share of 30%. And at this time, in this fiscal, Velcade seems to be even more better.

Now, talking about Velcade, it doesn't have any impact -- big impact from subcutaneous administration?

Subcutaneous impact I think is big. Since the approval of subcutaneous, now it's getting momentum. Therefore I think I would say it has a great impact.

Thank you very much.

With this, we'd like to conclude today's conference call. Thank you very much for your participation. I would like to ask for your continued support and cooperation to us. Thank you very much.

Thank you for taking 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.