Takeda Pharmaceutical Co Ltd (TAK) 2014 Q2 法說會逐字稿

(Interpreted). Thank you very much for joining the first half earnings report meeting.

At the earnings announcement on May 9, I explained that under the mid-range growth strategy starting from FY 2013, the core principles of globalization, diversity and innovation would guide our execution of scientific and non-scientific innovation.

We also announced our growth targets for FY 2013 to 2017 as mid-single digit annual growth for sales, or higher, and at least 20% annual growth for operating growth. And 25% core earnings to sales ratio by FY 2017.

To achieve these goals, we need to transfer -- transform ourselves into a robust and efficient operating model suitable to a global pharmaceutical company.

With that, I introduce Project Summit, a Company-wide project pursuing business process improvement and building new business models. Francois Roger appointed as CFO on September 1, will talk about the financial performance of the second quarter as well as the progress of Project Summit.

Even in the challenging environment, our second quarter results are well on the way to achieving our target set on May 9.

As of now, there are no adjustments to the earnings forecast, including net sales, operating income and net income.

Excluding special factors, such as Actos generics entering the market in the US because of LOE and foreign exchange, sales from July to September grew about 3% -- sorry, 5%. And our G&A expenses were flat year on year for the same period.

To maximize our sales and profit, we started Project Summit, a set of Company-wide initiatives to optimize the effectiveness and efficiency of our entire operations. And we are pleased to see good progress so far.

From the May announcement, Project Summit has completed the planning and benchmarking phase. And we are now moving into the full implementation phase.

I would like to mention a recent achievement. Since May, we have centralized our brand marketing organization under a single platform. And to build a truly global R&D organization, some R&D activities in Japan and Europe were consolidated and Millennium's R&D function was integrated into that of Takeda. We now have new offices with extensive global experience. Francois Roger, new CFO, and David Osborne, Global Human Resource Officer, we pursue effectiveness and efficiency in our global operations and human resources to support that. We have announced thus far initiatives centered on enhancing global human resources. In the near future, we will be announcing further globalization plans, including functions such as finance, HR, IT and procurement.

As the Project Summit moves from the planning to the implementation phase, it has been decided that CFO, Francois Roger, will take the leadership role. From now onward, Francois will lead the execution and delivery of maximal cost savings. Progress will be closely monitored and managed by the global finance function in a centralized manner. Due to the nature of the project, it may take some time to ensure the achievement of Project Summit in numbers. However, we will continue to update progress to you, including cost savings, implementation costs and employee headcount every second and fourth quarterly earnings announcements.

FY 2013 to 2017 mid-range growth strategy and Project Summit has just started under our unchanging core value of Takeda is we will continue our transformation into a robust and efficient operating model suitable for a global pharma to secure sustainable growth.

Our mission is we strive towards better health for people worldwide through leading innovation in medicine. We will -- we have created Vision 2020 to achieve this mission. The key message here is better health, brighter future. We will continue to grow steadily as global one Takeda toward this end. I would like to ask for your support and interest in our endeavor. Thank you very much.

Now I'd like to call upon Chief Financial Officer, Roger, to give you a presentation regarding the FY 2013 Q2 consolidated financial results and Project Summit. Please use the receiver upon your necessity.

Xavier Roger. I joined Takeda as the CFO from September 1. And I've been working for 25 years, including more than half of my career in the pharmaceutical industry, including a few years in Japan.

I'm going to do two presentation. The first one will on the second quarter of 2013 and the second one will be on Summit. I will start regarding the second quarter with the key highlights of the quarter.

First, I'm happy to report that we reached an underlying sales growth in Q2 of 5.1% on a like for like basis. What I mean by like for like basis is at constant exchange rates and excluding any specific one-offs, and excluding Actos as well given that the second quarter of 2013 is the last one where we are suffering from a negative comparison against last year with Actos.

So, 5.1% like for like growth is, in my opinion, very attractive for two reasons.

First of all, it corresponds to a growth rate which is more or less twice as high as the average growth of the pharmaceutical industry worldwide.

And second, it is very much in line with our mid-range guidance. So which proves that already in Q2, we have been able to deliver a pace of growth which is in line with our expectation for the medium-term.

Second important highlight is the fact that our cost control initiatives are starting to go good reasons -- to show good results, given that we have a declining cost base in Q2. I will elaborate a little bit further later on, but we see that as something very encouraging and very positive.

Something very positive as well is the fact that the early sales of new products are behaving better than expected. And if we look at Adcetris, for example, in Europe, it is very encouraging once again.

During the quarter, we had a favorable impact of foreign exchange during -- especially in sales. It was unfavorable in J-GAAP on operating income. Not IFRS, but for the time being, we still report in J-GAAP.

We have a strong balance sheet, and I'll give you some more color a little bit later, with very low net debt.

So, this quarter gives us strong confidence in the fact of delivering our full-year 2013 guidance in light of this first and second quarter. So, I will elaborate a little bit on some of these issues, starting with sales.

As you can see, so in sales, we grew in terms of underlying business performance by 5.1%.

If we look at the breakdown, we can see that the best business has been growing in the quarter, which is very satisfactory and I will give you some further examples of it later on. But, we see that the bulk of the growth is coming from new products, which is extremely positive.

Once again, positive underlying business performance link, which is absolutely in line with our medium-term guidance.

US Actos is the last quarter where we report a negative growth against last year given that we lost the patent in August 2012.

Looking a little bit more in details at the product portfolio, we can see that the best business is actually very resilient, which is satisfactory.

If we look at the examples of products that have been on the market for some time like Leuprorelin, growing like for like, so once again with a constant exchange rate, looking -- growing like for like at 6.4% in the second quarter.

Pantoprazole, 22%. Even a declining product like Lansoprazole, it's only by minus 2%.

Velcade, which has been on the market for more than 10 years, is still growing at 5%.

Colcrys, 4% and even if we look at new products, Nesina growing with a strong 34% in the quarter at constant exchange rates.

So really good resilience of the business and already significant contribution of new products.

Looking at the growth driver by geography, we see that, which we consider as positive, all regions have been delivering positive growth during the quarter.

So if we take out Actos, we have grown by 3.8% in North America. We have grown by 0.3% in Europe, which given market condition there is not bad. Emerging markets, and I'll give you more details in the next slide, has been growing at 28.3%. Very satisfactory.

Japan has been flat. But if we take Japan overall, including consumer health scare, we have grown by almost 2%. So very satisfactory to see that all regions have been delivering positive growth on a like for like basis.

Moving to emerging market, we have talked about it quite a lot over the last couple of quarters. We can see that all regions are contributing positive growth.

Russia and CIS plus 17%, Latin America 20%, Asia, which includes China, a good 20% in the quarter, which was an acceleration over Q1 and Middle East and Africa have doubled their sales in the quarter. So, strong momentum in all regions there.

Moving to -- from sales to the income statement. We are very satisfied by the fact that we see an improving gross margin. If we look like for like, excluding Actos, we have improved our gross margin by 2.2%. There are several drivers to it. But one of them is obviously the largest contribution of new products which have a better margin.

And we have a good control of our costs, be it SG&A or R&D. We need to be a little bit careful though, as there is a little bit of a timing impact. And we expect to spend more in the second half of the year, but I'll come back to it.

EPS is up. We have increased our EPS from JPY41 in Q2 2012 to JPY45 in 2013. Even if we compare it without any foreign exchange impact, it's a JPY3 increase, which we consider as encouraging and positive.

Cost control. You know that we started to talk about this Project Summit in May, so which is a little bit more than six months ago. But we start seeing the early results of this project.

If we look at SG&A, we compare what we have spent in Q1 and Q2 versus the average of what we have spent last year. We have actually spent 11% less in the first half than on average last year. R&D minus 16% and, in total, minus 13%.

Once again, let's be careful because we are going to spend more in H2, so I want to be extremely clear on that both in sales and marketing because we have to support new launches like Brintellix in the US, for example, like Nesina in the US, like other products as well in Europe and in emerging markets.

And in R&D we are -- we will spend more as well because we are investing more on products like TAK-875 or MLN9702. So, there will be more costs in the second half of the year and you will see that when I will come to the guidance for the year.

The -- that being said, when we compare the second quarter of this against the same quarter of last year, and if we exclude Actos which, once again, is disappearing in the comps, we see that we have a strong underlying profit improvement of 37%.

If we compare that with our objective of growing our operating profit by 20% year on year, we are delivering in Q2 against the objective that we had. And even when we set 20% year on year, we had been careful because we had been saying that this might not be linear and, actually, we saw that it would be a little bit more back-loaded in the 2013 to 2017 period. But, we can see that in Q2 we are already getting there with a strong underlying profit improvement on a like for like basis.

Moving now to the balance sheet and cash flow statement.

We have a strong balance sheet. We have quite a lot of cash, JPY718b, at the end of September.

We have increased a little bit our borrowings and our debt as well by JPY250b because we issued a bond in the month of July, as well as we raised additional financing in July for a total of JPY250b under outstanding condition with an interest rate in yen for seven year maturity at 0.5%, which is very attractive. So we wanted to benefit from it. I think that the fact that we have raised money at a low level as well reflects our strong rating because we are rated AA minus.

So as I just said, we have a low net debt, if we take the gross debt minus the cash. So we have JPY74b of net debt which is a net debt to EBITDA ratio of 0.2 times, which is very good.

You can see at the bottom part of the chart there the debt maturity that we have. So, on average, our debt, taking into account the new financing that we just organized in July, we have an average maturity of around three years, which is very satisfactory, which we extended in the course of the quarter.

Moving to cash flow generation. We have a strong cash flow generation. EBITDA has been fairly constant at around JPY200b -- around JPY210b in the first part of the year. We had negative -- we had some headwinds in terms of working capital during the quarter. This is something that we are not especially happy with. But also part of it is linked to foreign exchange and part of it is linked to some seasonal factors. So we expect that we will recover all, or part of it, in the second half of the year. So we are not too concerned about it. But this is something that we are working upon. But we can see that a net -- we are generating a strong cash flow.

Full-year outlook. So in light of what we saw in the first part of the year, and especially in Q2 with the strong momentum in sales, improvement of margins, we are reiterating our guidance with net sales at JPY1,680b. And operating income at JPY140b.

You may think that we are too conservative there because when we look at what we have achieved in H1, we have done already quite a lot. As I said, we expect anyway to do better in net -- in sales in the second half of the year but less operating income due to the fact that we will have a stronger investment, both in sales and marketing to support new launches in the second half as well as early next year and to support R&D as well. So, we reiterate the guidance with confidence.

That completes my -- the first part of my presentation on the financial results. Now I will move to the second part which is about Summit.

So, we started to talk about this project in May of 2013. It is very important to -- for everybody to understand that Summit is about growth. It's not about cost cutting. Growth means that we want to work on the effectiveness of our operation.

Effectiveness means what? It means that we expect to increase our sales which relates to the medium-term guidance that we have of mid-single digit growth in sales over the period 2013 to 2017.

Growth means efficiency as well which has to do more with the fact of improving our margins and our profits. And that has -- is essentially related to a better cost management.

Summit is not about one-off items. Summit is about transforming the Company. It's about structural changes in order to improve and secure our competitiveness. And so we are working extremely hard in order to improve our process and get best-in-class processes across the organization.

We have started this project by benchmarking our P&L with the best in class in the industry. From that point, we have defined targets in order to -- it's a target that we should reach in terms of growth and savings. And we have been working over the last six months in order to identify a large number of projects and initiatives in order to deliver both the growth on the sales side and the better cost management and efficiency.

We are now -- we have now completed that benchmarking exercise. We have completed that project identification almost, I would say and we are now entering into the implementation phase.

The Summit -- if you look at Takeda, Takeda made two recent acquisitions, as you know. Nycomed in Europe and Millennium in the US. That gave us both -- that helped us to build a strong franchise in oncology on the one hand and that helped us to gain a better international footprint.

For Takeda today is very, very different from the Takeda five years ago.

We are in the middle of a significant transformation which means as well that we have to achieve a large number of synergies and savings. We have a good track record in achieving these synergies.

If I take the example of what we have achieved already in Europe over the last couple of years by merging the Takeda and Nycomed operations, we have already achieved JPY40b of savings a year in Europe. And we have reduced a number of positions in Europe by 2,000 positions.

We have done a similar exercise already in the US as well, which means that we are confident in being able to achieve these savings because we already have a good track record in doing such an exercise.

The mid-range growth strategy that we have established in May, is to grow our top line by mid-single digit, which means that we ambition to reach about JPY2 trillion of sales in the year 2017. And we expect to reach 25% core earnings in 2017, which means about JPY500b.

How we -- how do we get there? It is -- it's not simple to do, obviously. It's complicated. But to simplify the way to get there, there are two main building blocks.

The first one is to increase the profits through sales growth. So about half of the improvement in profit will come from sales improvement and half of it will cost -- will come from better cost management. So half sales, half cost management.

I will now describe more exactly what we mean by the first half that is coming from sales management. Tachi will describe a little bit later our pipeline. We have a strong pipeline both of recently launched products such as Azilva in Japan, Nesina in Europe and in the US with already good results. We are going to launch additional products like Brintellix in the US, like Vedolizumab in the -- in many countries.

It is interesting to notice that we expect the contribution of new products to exceed one-third of our total sales and even to reach 36% in 2017 versus less than one-fourth in 2013. So we have a strong ambition there and we are confident that we have the right pipeline in order to do so.

This positive impact will obviously -- this -- sorry, sales drivers will also impact the margin because with the higher contribution of new products, we will have a better margin because, as you know, we have a better margin on new products.

Now, if we move to the second part of the profit improvement, which is achieving efficiencies. Summit will bring sustainable efficiencies and we expect to reach more than JPY100b of cost savings by 2017 versus our original plans.

Some of these projects will require time because we are not going to deliver everything in 2013 or 2014. Some of them require time, especially on the manufacturing side because, for example, we need to re-register some of the sourcing of some of the products in some countries. So the -- there is a certain part of the savings which will be back-loaded.

I am personally very confident that we will be able to deliver all the synergies because it is not composed of a very limited number of initiatives, but it is the consequence of many different initiatives in many different geographies.

It is coming from R&D. It is coming from sales and marketing. Manufacturing, G&A, and it is coming from all geographies. So the risk profile of delivering all of the synergies is, in my opinion, limited.

Now I want to define by -- with the main four areas what we mean with Summit initiatives and how do we get there.

If we start with sales and marketing, what do we expect to get? A couple of examples. Centralization of brand marketing organization, which is in progress. Consolidation of advertising agencies. We were actually using a very large number of advertising agencies and we are consolidating these agencies in order to get better terms. We are leveraging on procurement, on supplier relationships and all of these initiatives, the three that I mentioned plus some other ones, should help us to deliver more than JPY20b in 2015 coming from sales and marketing, and another JPY5b in 2017. So more than JPY25b annually from 2017 onwards.

I want to mention that as far as sales and marketing is concerned, we don't expect to affect significantly our sales force because we need our sales force to support our future launches.

Moving to production and supply chain, we expect there to optimize manufacturing sites. We have already closed two sites. One in Norway, one in Denmark and consolidating some of our manufacturing in Europe, in Germany and Poland. We are focusing a lot on capacity utilization, which is absolutely critical. We are launching operational excellence programs. We are centralizing sourcing, which is the same as what we saw earlier, for example for raw materials, for packaging and so forth.

We are integrating a global supply chain organization. As an example, we are recruiting and creating the position of Chief Procurement Officer. And we will have a new leader joining December 1.

As far as production and supply chain is concerned, we expect to reach JPY5b in 2015 and another JPY5b in 2017. As I mentioned earlier in production and supply chain, some of these initiatives will take longer to deliver results because they are subject to a certain number of regulatory approval or negotiations.

Moving to research and development, we -- in terms of initiatives, we want really -- we have started to create a truly global R&D organization. As Hasegawa San mentioned earlier, we have already integrated the Millennium R&D facility into Takeda facilitates. We have consolidated the Takeda Bio Development Center. As well, we have consolidated R&D sites in Europe and reduced the number of sites that we have.

We have created global functions such as pharmacovigilance, regulatory affairs. We are, as I said earlier, dealing with global procurement. For -- one example of it is CROs. We were working with four different companies in terms of external support for CROs and we have consolidated into two, which will lead us to get something like 20% savings on most of our external work.

The global amount that we expect to spend in R&D, as you know, will remain flat, around JPY300b for the period 2013 to 2017 while we expect our sales to grow by mid-single digit in the next four years. That is equivalent to savings of about JPY25b -- more than JPY25b in 2015 and another JPY5b to reach more than JPY30b from 2017 onwards.

Moving to the last part, G&A. There we are creating global functions, finance, IT, HR, procurement.

We are moving a certain number of activities into shared services. We have done it in Europe to a large extent in countries like Poland and in some other countries, moving into low-cost geographies for some activities. We are harmonizing and standardizing our processes, which is an excellent cost-saving driver.

We are consolidating our platforms. Just as an example, we currently have four different ERPs and we expect to consolidate it, maybe not into one but probably into two. And we are leveraging on scale for procurement.

All these initiatives, the ones that I quoted, plus other ones, will bring us savings of JPY12b -- at least JPY12b in 2015 and another JPY3b by 2017 onwards.

In total, as I said earlier, we don't expect major issues in terms of execution and delivery of these savings because it's a sum of many different projects in different areas, as I mentioned earlier, and in different geographies.

You may notice that the global amount of at least JPY80b in 2015 per annum and more than JPY100b in 2017 is actually superior to the sum of the parts. Why? Because all the numbers that we have quoted before are minimum numbers. We want to make sure that we under-promise and over-deliver.

In terms of workforce reduction, we are targeting a low single digit workforce reduction. I just remind you that we are a Company which ambitions grow, so this project is not merely about cutting workforce.

Implementation cost. We plan to spend between JPY80b to JPY90b over the period 2013 to 2017, which shows you, even if the amount of the restructuring cost and implementation cost is significant, you can see that if we measure it against the benefit that we expect, the payback is actually very good.

And, I want to mention as well that so far we are on track with our plan. We will, from the end of our fiscal year, report on a regular basis the achievement and the deliveries that we have achieved in terms of savings.

So, recapping where we are, so I want to reiterate in the same way as I reiterated our short-term guidance for the year 2013, I want to reiterate our medium-term guidance for -- with this Project Summit within an horizon of 2017 and I reiterate this guidance with confidence.

Once again, mid-single digit sales growth ambition, operating income growing at more than 20% CAGR. I insist on the fact that it may not be linear though. We may have years where we may be below that level. And the third ambition that we have is to grow our core earnings to 25% in 2017. Core earnings is a notion which has to do with -- deal with IFRS.

Once again, to summarize, half of it is coming, half of the profit improvement is coming from sales growth, half of it is coming from better cost management.

In conclusion, Takeda late stage pipeline is both rich and deep. We are transforming our business in order to become a strong global player. We will continue to take bold and transformative steps in order to make ourself (sic.) more effective, more efficient, more profitable and more competitive.

Project Summit is absolutely supporting our mission. We strive towards better health for people worldwide through leading innovation in medicine. And I think that Summit is totally in line as well with our corporate tagline, better health and brighter future.

Thank you very much.

(Interpreted) Now I would like to invite the Chief Medical and Scientific Officer, Yamada to give you a presentation regarding R&D update. Again, please make use of the receiver if you need.

Thank you very much and hello to you all. I would like to report on the progress of the R&D portfolio in the second quarter of fiscal year 2013. To remind you where we operate from, our R&D organization is focused on the patients. We believe it is a critical focus because it is very clear that in today's world the only way to be profitable in the pharmaceutical business is to have a very strong patient focus, to meet unmet medical need with innovative products, to work with a sense of urgency. We are committed to innovation. We partner effectively with many people, both in industry and in academia and we make great efforts to measure the impact of our efforts.

On top of that, we had two special initiatives for this year, quality of thought and operational excellence. You have heard something about Project Summit and the very strong contributions that R&D has made to improving our efficiency as a Company. But, there are some other initiatives that we've taken to improve our research productivity.

In terms of quality of thought, we have spent a great deal of time understanding how to achieve proof of concept with our many, many new molecules and how to develop those molecules in the most efficient and effective way in the later stages of clinical development.

In terms of improving our R&D productivity, we had some very important targets. We wanted to reduce our R&D cycle time. We had an initiative that was called Fast to IND in which I think I told you last year that we improved our cycle time from candidate selection to IND from really an overly long 39 months to 12 months and now we are achieving 12 months from candidate to IND for virtually all of our compounds. We have taken the same initiative and applied efforts to create a Fast to Candidate program and a Fast to POC&C program.

We have reduced our R&D costs. There has been a 40% reduction in the cost per candidate molecule. We anticipate at the end of the year, we will have reduced it another 30% beyond that.

We have both optimized R&D structures. Most importantly, we've had the opportunity to integrate the Millennium R&D function into the global Takeda R&D organization. That has been very, very productive initiative in which not only do we operate more efficiently, but we have been able to incorporate into Takeda R&D a great deal of new talent coming from Boston into our other programs beyond oncology.

We've created a program in which we take our targets which we have selected and have our various discovery sites which include Cambridge UK, Cambridge US, San Diego and Shonan Laboratories, all competing for the same targets. And, in fact, the choice of where that target gets developed depends upon the commitments that our discovery teams makes towards those targets. That competition has had a great impact on the effectiveness of our discovery organization.

And with Project Summit, we have consolidated our European R&D activities largely in London with closure of the Roskilde site in Denmark and reduction of the R&D presence in the Zurich side.

Of course, we have put the output from this R&D engine into every effort to improve R&D productivity, which we are measuring on a constant basis.

The pipeline stage-ups are presented on this slide. Brintellix was just recently approved in the United States and we're very excited about this new product. I'll say more about it in a minute.

Oblean was approved in Japan. It is the first product approved for obesity in Japan and we believe it has a great potential.

Vipidia or Alogliptin and Vipdomet Alogliptin/metformin combination and increasing the Alogliptin pioglitazone combination were all approved in Europe.

And TAK-390MR, or Dexlansoprazole has been approved in two countries in Europe. We're going by the country route.

TAK-816, which is our Haemophilus influenzae b vaccine has moved forward into the filing status.

Amitiza has stayed where it is.

We have progressed our Alzheimer's program, our biomarker-based Alzheimer's program, 84833 which is Actos in a very low dose with a TOMM40 biomarker into Phase III and we have a very exciting new molecule that we've started in Phase I TAK-137 which is an AMPA modulator.

In terms of some of the specific programs, we announced the results of the EXAMINE trial which is the long-term cardiovascular safety trial with Alogliptin. This is a trial that involved some 5,400 patients and the results were very, very much what we had hoped to find. There was a clear effectiveness in treating diabetes. This is no surprise to any of us. From the standpoint of cardiovascular safety, there was no difference than from placebo. So, there was no cardiovascular risk with Alogliptin.

Importantly, we had no evidence of increased hypoglycemia which has been a problem with many other products both in the class and outside the class. We had a very low frequency of acute pancreatitis or chronic pancreatitis. There was no pancreatic cancer which is a problem that has been anticipated with some of the DPP-4 molecules. We found no trend towards a decrease in mortality and there was no incidence -- no increased incidence of hospitalizations for heart failure; a problem that has been associated with other products in diabetes.

Brintellix is our new multimodal antidepressant in-licensed from Lundbeck in Denmark. It was approved in the US in September for the treatment of major depressive disorders. We had a very aggressive Phase 3 program that involved six positive short-term studies and one long-term maintenance trial. What we found is the incidence of treatment emergent sexual dysfunction was quite low with Brintellix and what is most important was we observed a favorable profile related to cognitive dysfunction.

On the slide you can see the effects of Brintellix on acute -- on cognition in acute major depressed patients who are elderly and we compare our results with a standard Duloxetine.

What we observed is that like Duloxetine, we increase scores in what's called the Rey Auditory Verbal Learning Test. This is a test of memory. But, what we found was that in addition to improving memory, we found an improvement in what is called executive functioning, or reasoning, or decision-making. This is the so-called Digit Symbol Substitution Test which Duloxetine and other antidepressants are not able to do. This is a very interesting and unique feature of Brintellix as opposed to other antidepressants previously launched.

Vedolizumab, which is our alpha-4 beta-7 monoclonal antibody is an exciting new opportunity for treating inflammatory bowel disease, specifically ulcerative colitis and Crohn's disease. It was filed in the EU in March of this year and as in the US in June of this year. We were delighted when we were informed that the -- for the ulcerative colitis indication, that Vedolizumab would receive a priority review which shortened the review cycle so that we have a PDUFA date of February 2014. We anticipate an advisory committee in December 9 for discussion of this compound.

We have demonstrated efficacy with this compound both in patients who were TNF, anti-TNF naive and also efficacy in patients who had been treated with anti-TNF antibodies and failed. The results of our studies were presented in two papers. I'm sorry, in a paper in the New England Journal of Medicine.

One compound that we have stayed with for the long run, it's been a long time that we have been working with this compound, is called Contrave, which is an asset that we have partnered with Orexigen. It is, as you know, it's a fixed-dose sustained-release combination of naltrexone and bupropion to very safe and effective products. But in combination, we have demonstrated substantial and significant lowering of weight over a period of six months to one year.

The FDA required us to do a cardiovascular outcome study. We anticipate an interim readout from that study later in November with a possible file for registration before the end of the year and with a six month review period, potentially the approval of the compound, in June. This is what our partners Orexigen tell us.

We think this is a very unique opportunity in the sense that this is a very safe combination unlike the other compounds that have been released for obesity in the past year.

A program that we have not talked much about before is our biomarker-based program and Alzheimer's disease. It's a landmark clinical program that could potentially change the continuum of Alzheimer's disease from normal healthy subjects to Mild Cognitive Impairment to Alzheimer's disease. This biomarker has been associated with a population of patients who are normal, who are more -- much more likely to develop Mild Cognitive Impairment and then progress on to Alzheimer's disease. We have -- experimental medicine studies very clearly indicate the ability of the very lowest dose of aspirin to have a potential effect on delaying this progression of normal to Mild Cognitive Impairment and then ultimately, to Alzheimer's disease.

Our protocol basically divides population into two groups. A low risk group defined by the TOMM40 assay which would be placed on placebo and followed for five years. The high risk group defined by the TOMM40 biomarker would be divided into a group that will be placed on placebo and a group that will be placed on low-dose Actos. We are quite excited about this program. It's the first biomarker-based Alzheimer's disease program and indicates that a so-called personalized medicine approach that we'll be taking and has been taken aggressively in oncology, will now go onto other disease areas, including, of course, immunology and in this case, Alzheimer's.

You're all aware of Fasiglifam TAK-875. It's our GPR40 partial agonist which is unique molecule, a new approach to diabetes. We think it has all the features of what sulfonylureas are and yet it has none of the contingent liabilities of sulfonylureas which include hypoglycemia and short durability of action. This product is well tolerated. This is a product that does not require dose adjustments in renal patients. It is highly effective in the 25 and 50 milligrams doses. This product is moving forward very aggressively towards registration, filing for registration in Japan later this year and in the US we are of course going to be delayed a little bit because of the requirement for cardiovascular safety studies.

9708, which is our first -- which is the first oral proteasome inhibitor, is progressing in Phase 3 moving along in relapsed and refractory Multiple Myeloma and also in amyloidosis and in frontline Multiple Myeloma.

All signs are that it is a very effective treatment. There have been neuropathy patients identified in their clinical trials but very, very low percentage, about 3% have grade three neuropathy or worse. We think this is a product that is going to be very, very important for not only induction and treatment in Multiple Myeloma, but for maintenance of Multiple Myeloma. Because it is an oral product, it's ideally suited for the maintenance trials.

We have talked about many of these assets before, but I just wanted to give you a sense of what we are excited about early in the pipeline. These assets are moving forward very quickly in the clinical development.

MLN8237, or alisertib, as you know, is in Aurora A kinase molecule, highly selective inhibitor of Aurora A. It's in Phase 3 for relapsed or refractory peripheral T-cell lymphoma, but ultimately, its potential will be in solid tumors.

Namilumab is an anti-GM-CSF monoclonal anti-body MT203 that is moving forward rapidly from Phase I into Phase 2 from rheumatoid arthritis. We have identified a biomarker, potential biomarker that will define a population that will respond to this product, that we will ask that biomarker in Phase 2 and then move aggressively in Phase 3. This would be really another example of personalized medicine, use of biological monoclonal antibody, in a defined population that we believe will have responsiveness to this antibody.

TAK-137 is a new product which is just currently into Phase 1. But I wanted to tell you about it because one of the holy grails in neuroscience, psychiatric disorders and neurologic disorders is the AMPA receptor. But most compounds, every compound in this class has had a seizure liability. But our pharmacologists, working closely with our biologists and chemists, have figured out exactly how to create a molecule which will not have the seizure potential. In none of our animals have we seen a seizure signal whereas in every other AMPA modulator that's been tested in the industry, that seizure potential was identified in pre-clinical studies. We think this is going to be a very effective and exciting game changer molecule for neuropsychiatric disorders.

On the vaccine front, we have progressed with our dengue vaccine which we acquired from in Inviragen. It's moving very quickly through the Phase 2 cycle. We have presented data that it produces an immune response to all four dengue types in more than half of the patients and in 100% of the patients we get very strong immune response to at least three.

The norovirus vaccine, I think there may have been some confusing news about the norovirus vaccine. We had definite proof of concept that this molecule prevents the symptoms of diarrhea, nausea and vomiting in patients who are infected with norovirus in human challenged trials.

In these trials, every human subject received a cocktail of norovirus vaccine, swallowed it and we were able to prevent the symptoms of norovirus vaccine infection which is nausea and vomiting and diarrhea. It did not reach its primary endpoint. But the primary endpoint was predicated on a diagnostic test which was actually not required in this study because we knew 100% of the patients were getting the norovirus infection. Because of the inadequacy of the diagnostic test, it did not reach its primary endpoint. But the unequivocal answer with this vaccine is that it works and we are progressing very rapidly to Phase 3 with this asset.

Just one note on the building on the success of ADCETRIS, we have a new antibody drug conjugate which is MLN0264. It targets guanylyl cyclase which is highly expressed in GI tumors. This is moving forward in colorectal cancer, gastric cancer, esophageal cancer and pancreatic cancer. We're very excited about this antibody drug conjugate.

Then just to present the norovirus vaccine, we -- I told you about how we looked at this vaccine. We had a human challenged trial. We had very clear evidence that the incidence of norovirus illness, as well as the severity of the breakthrough cases, was significantly diminished as shown on the right. There was a significant reduction of mild, moderate or severe symptoms in patients with norovirus infection and more importantly, there was a positive trend towards the reduction in viral shedding in the stool. So, where norovirus gets transmitted often in crowded quarters, on cruise ships, in day care centers, not only will the person who got vaccinated benefit from this vaccine, but, because of the potential for preventing the shedding of the virus, there is a real potential for preventing outbreaks of the norovirus vaccine -- norovirus infection.

As you know, we have a steady stream of pipeline products that we anticipate will be registered in all four regions Japan, US, EU and emerging markets. We really -- we believe we have a truly exciting rich and deep late stage pipeline and, given the state of our Company with most of our major patent expiries behind us, we have a very bright future indeed.

Thank you very much.

(Interpreted) Thank you very much. We are now going to have the questions and answer sessions.

In addition to the venue in Tokyo, there are some people connected in Osaka as well and we will receive the questions from Osaka on telephone line too. So first, I'd like to entertain the questions from the audience in Tokyo venue and in the interest of time, please ask questions up to two per person. If you have any questions, please raise your hand and please introduce yourself, your name and your association.

(Interpreted) [Amito from EKBP]. I'd like to ask a question regarding the diabetes area. In Europe and the US, SGLT2 inhibitor launched. But, regarding Alogliptin, what is your view on possible impact of those SGLT2 on Alogliptin? And both in and outside of Japan, do you have any possibilities of in-licensing or partnering with any companies regarding the introduction of the SGLT2 as your product?

We have launched Alogliptin in the US and are observing the situation very carefully. I think at this point in time, it's a little bit too early to judge where these new therapies will find their place in the therapeutic repertoire.

In Europe, we have Alogliptin approved, but as you may know, the situation of DPP-4s in Europe is rather complex because in some countries they are reimbursed and others they are not. So there is no single answer on the situation in Europe. So observing this very carefully, is there a potential to combine them mechanistically? I would say yes, but Tachi is probably in a better position to answer this. But I don't think we have any rights to an SGLT2 compound, so we could pursue this. Whether that clinically makes sense, Tachi should take that question.

Yes, it is, of course, possible to combine SGLT2 and DPP-4 and I believe some companies are moving ahead with that combination.

And from a strategic standpoint, it might make sense because the way SGLT2 works is essentially to decrease the glucose load and DPP-4s increase the insulin response to that load. But I think we will only know -- learn over time how SGLT2s will perform from the standpoint of safety. There is no question that there is an increased incidence of urinary tract infection with SGLT2. And the long-term implications of that on a chronic basis, we don't know as of this time.

(Interpreted) Thank you very much.

(Interpreted) Next question please. Yes.

A question for Mr. Roger regarding the Project Summit. Regarding those numbers, how much is the approximately percentage to sales you are going to cut within a five years' timeframe?

We have said that we expect to cut about JPY100b and so if you --

Yes, if you compare to your projected sales, it's 5% or 4%?

We have said that we expect it to reach JPY2,000b of sales in 2017 and save about JPY100b.

Yes, so it's going to be 5%.

About yes, in 2017.

Right, so level-wise it is the same level but the number which Merck are talking about between 5% and 6% the other day.

Yes.

(Interpreted) Yes, okay. And the second question is -- this is a question to Mr. Hasegawa. Project Summit, you are showing big numbers and you will have various issues. And employees all together need to have that mindset change. And how do you educate, or how -- what kind of sessions would you have and have you done any sessions? And what's the status of changing their mindset? So, in terms of implementation, what are you doing in-house, rather than individual education?

(Interpreted). They will participate in actual initiatives. And they will see results and they get feedback on their own. And they will change their mindset. Just one example is, for example, global procurement function is to be established. Chief Procurement Officer has not arrived yet, although he has signed. As Francois said, he will be arriving in the beginning of December. But, by that time what we can do will be implemented. And we have started that, so people are participating in that.

And we will see results coming out of the initiative. And everybody would understand. With this effort, you can do this, which we thought wasn't possible in the past. So, they would be having that kind of feedback. And also, in Japan, the way -- how we evaluate, and especially for management levels, expected performance -- assessment of their performance and the way we do it, and regarding promotion route is being reviewed. Like in the past, it would be down to a certain level in the ladder of promotion after so and so many years should be spent before you can move to the next level. But we get rid of that. So we have various initiatives and people would have feedback from that.

And regarding assessment and evaluation, we are thinking of introducing a new assessment and we need education for that. And that will be a continuous effort. And through all those processes, they will feel that things are changing. And the launching has started and the initiatives have already started. That's right. Not everything start at once, but we are starting whatever we can start and a substantial portion has already started.

(Interpreted). Thank you very much. We would like to receive the next question, please.

(Interpreted). Thank you for your presentations. I'm Urushihara from Nomura Securities. I have two questions. One is a question to Mr. Hasegawa. Regarding Project Summit, the scope of implementation, for instances OTC business, do you think that you should separate this from the main one? Or do you involve any rating associated companies to reduce the costs and so on in the Project Summit? Could you tell us the outline of the scope? Is it going to be out of Takeda standalone or you'll be including all Group companies?

(Interpreted). The basic concept is that there is no sacred cow. Therefore, focus, of course, will be shaded by Takeda as a single company, but it will also involve other parties as well. And you also pleased to make a follow-up, but what was your question, sorry?

(Interpreted). So for instance, what about the OTC business? You talked about much efficiency.

(Interpreted). Well today we didn't give presentations on OTC specific issues. But OTC has been showing the two-digit growth so far. And it's been contributing so much to both the sales and the profits. Therefore, regarding any possible separation of OTC, we are not positively or actively thinking about that possibility. But we think a limited scope we will take deliberate steps whether or not we will be able to enter into the Chinese market or so. We have been considering that. So, so far, at the moment, we don't have any ideas to separate OTC.

(Interpreted). And any affiliates or wholesalers?

(Interpreted). Regarding those parties, aside from the ones that we showed you, in terms of Project Summit, what can we do more efficiently? And efficiency does not necessarily mean cost only, but we need also to increase profit. And we have been already discussing these models with the affiliates and wholesalers. And especially, if amongst our products, there are any products which can be sold or marketed by affiliates that could be one possibility. Or, if there is any other potential promotional co-operations possible, we will also do that.

And also procurement, if our platform can play a role and support the affiliates, then we will do so. So in a true, good sense we would like to do it together as true business partners. And we have already started discussion. Thank you.

A question about the TAK-875. So Dr. Yamada, you mentioned a slight delay of the TAK-875 through (inaudible), no?

I didn't mean to say there was a delay from plan. There is a delay built in between the US file and the Japan file because of the requirement for cardiovascular safety settings.

So that means the lower instance rate of MACE may cause the delay of the TAK-875.

No. The fact that we have to do the outcome studies causes a delay. In other words, in Japan, we can file for registration without the cardiovascular outcome study.

Yes, but everyone knows that point.

Yes.

So that means the lower incidence may cause or the FDA may request more.

No, I don't mean -- we have not delayed beyond what our current plan is. All I was saying is that the US file will follow the Japanese file because of the requirement for an outcome study. That's all I said. I don't mean an unexpected delay in any way.

So, I understand. Thank you.

(Interpreted). Thank you. Next question, please.

(Interpreted). Sakai from Credit Suisse. Oh, this is a very good opportunity, therefore I would like to ask to the President. Takeda's reform that you aim at, you now employ a new CFO. And what is the progress or status today?

And depending upon the current status, I think we will be able to see how long more that you need to go. And I understand that you introduced many human resources. And it makes me a little concerned about the internal availabilities of the human resources. What about the atmosphere in-house?

(Interpreted). Regarding the current progress status toward the target, business is always a going concern. Therefore, when we carry out such transformation or reform, we don't think that we will be able to see ourselves progress. That we are always at the 15% or 16% progress and it is always difficult to go beyond that.

And then, what is our target? What is our objective? We make it clear already in-house, that this Summit is one of the factors. Takeda, as a company, it should become a global business-wise, competitive company. That's a very simple target or objective. And in order for us to attain that, in necessary functions we need necessary human resources. And if that cannot be found in-house, then we need to bring the global talents, if what we are trying to do is on a global scale and if that is a thing that we have never done before.

And global standard talents, if -- without having such talents, if we cannot do that, then we will bring them from outside. And through those selection processes, I don't want to be misleading, but, of course, we had the external headhunters connecting the screenings for internal or human resources as well, including the future talent development purposes as well. And if anything being short, then what needed to be done by those internal talents to catch up. And unfortunately, as a result of those screening selection processes, in order to become globally competitive in a short time, ready to available global talents where needed. And as a result, many foreigners were selected.

But my expectation is that having them as role models, young, ambitious people, to become those people like the ones that they are just looking at right now, then, in the near future, if a good mix will be formed between Japanese and non-Japanese, that will be ideal.

One question for Brintellix. Having combination and special [dye] function [revenue] could be a real benefit. But what about the other antidepressant naive patient in the US, is that going to be a new market?

Well, the antidepressant market is, of course, characterized by two things. There is new patients coming into the -- newly diagnosed with the disease. But there's also a group of patients which we call in English churning that are constantly looking for something which is better. So we believe the source of business for us will be patients that are not happy with their current medication, and particularly, as Tachi alluded, patients that are active, that are still wanting to perform in their daily life, that have a daily life that is characterized by professional stress.

And of course, those patients that are newly diagnosed in this -- with a similar profile will also lean towards taking Brintellix. And we believe, as our partner does, that the compound has, for the reasons that have been described, truly blockbuster potential. And we're very, very happy with having that drug and the properties to work with, starting soon.

Just to follow-up. How many reps are getting the product in the US?

Well we'll definitely be competitive because that's something we're going to share with Lundbeck. We have a meeting next week with Lundbeck management to finalize things. But we will definitely be competitive to the recent launches in the US.

No numbers on the reps.

No.

(Interpreted). Next question, please.

[Sosaki] from Nikkei Newspapers. I'd like to talk about cost savings. Simply gathering four areas, JPY80b in FY 2015 or JPY103b in FY 2017 cannot be achieved. But these short exposures regarding the workforce part, you may touch that what I assume. But if you implement, do you have any ideas of implementing it out? And if so, then at what timing?

Okay. So obviously one part of the restructuring that we are doing and the savings that we are delivering is going to impact the workforce globally, in many countries. As we said, there is one part which is going to come later in the years 2015 to 2017. The programs are, as I said, very diverse, both in terms of geographies and in terms of activities. And we have already started to execute some of these projects. As I mentioned, for example, we have closed already a few industrial sites or a few R&D sites. I hope that I answered your question.

(Interpreted). As he explained in his presentation, it is quite diversified in areas and also -- and promise over-delivery. So, what we commented or promised, we would like to really achieve the numbers. Therefore, conservative numbers are shown. JPY80b in FY 2015 and JPY100b in FY 2017. So please understand that way.

(Interpreted). So, simply speaking, can we understand that the number of headcounts will be declining?

(Interpreted). As he also explained, low single digits. Therefore, out of current 30,000, less than 5% reduction is considered.

(Interpreted). By FY 2016?

(Interpreted). Yes, of course.

(Interpreted). Another question. Regarding your cycle down reduction of R&D, Mr. Yamada says that you have been achieving lots of shortenings of those cycle times. So, what are the factors contributed shortenings of cycle times? And if you are getting ahead of the companies in terms of this particular aspect, what makes you achieving those?

When I came to Takeda, I was very surprised that we were taking 39 months, from candidate selection to IND. And, at GSK, our cycle time was 14 to 15 months. I challenged the team to come to 12 months. And basically, it was a multi-disciplinary team that worked very hard to look at processes, to see what processes could occur in parallel, simultaneously, as opposed to in series. What assumptions were being made about steps that had to be taken early? For example, what kind of studies could be taken in tox before candidate selection, and how fast we could move with some of the clinical trial supply manufacture and things like that?

In the final analysis, it was very difficult because many -- as an R&D organizations, we have a tendency for people to get almost religious about how they do things and we had to tear that thinking down. And the way we could do it was to show examples of how other companies are able to do it without doing it the Takeda way.

And, I must say, I was very proud with our team because they were able to do it in a very inclusive and collaborative manner, and in a manner whereby the decisions that were made were immediately accepted and endorsed. Today we only take 12 months from candidate selection to IND and I'm very pleased with that.

(Interpreted). You want to shorten this furthermore? Do you have a plan like that?

Well, I think it's going to be very hard to shorten the candidate to IND process. But we're looking from target to candidate and the timeframe it takes for that. We have a team working to see if we can have a significant reduction in that.

We are also looking at the IND to POC&C, proof of concept and competitiveness. And we are looking at ways in which we can do this. So, I anticipate that over the next year to two years, that there will be a significant reduction in both of those, to go from target to candidate, and from IND to POC&C. I can't tell you exactly the timeframe in terms of the reduction but I am convinced that there is significant reduction possible.

(Interpreted). Next question, please.

It's Seki, from the Barclays. So, Mr. Roger's conversation was on your new road. So I have two questions for you. So first, in terms of the JPY100b cost of reduction and the low-single digit headcount reduction, so do you have the breakdown, recent breakdown, for the two endpoints?

We don't provide this information, sorry.

All right. Thank you. And number two, dividend. So, as you mentioned, I know the Takeda is a growing company. And also, I know the Takeda already maintained -- saved the dividend to maintain JPY180 per share by the end of during fiscal year 2015. So, do you think the Takeda would be ready to increase dividend after 2016?

We value a lot shareholder remuneration. And so we are -- we have been happy to confirm the dividend policy with the distribution that you just mentioned, and even in the medium-term. There is no plan at this stage to raise the dividend. This is something that the Board can review over time. But for the time being, we stick to what we have announced by maintaining the dividend at the current level. And we believe that this level is appropriate.

All right. Thank you.

(Interpreted). Thank you. Our next question, we would like to have some questions from Osaka.

(Interpreted). I'm [Ishi] from (inaudible). I'd like to ask questions regarding four regions of emerging markets. Which regions showed a high performance? Which regions showed lower performances? And if the performance is low, then how to improve the situations? I'd like to ask about the emerging markets by region.

We are actually quite happy with the performance in all the regions that we have represented to you. I mean, we've seen good growth in Russia, CRS. We've seen good growth in Brazil. We've seen good growth in Latin America. Maybe that's our weakest point, but that's relative. And we've also seen good growth in North Asia, including China. So I think within growth rates ranging between 15% and 20%. That's compared to what our peers have reported. That's quite a good performance. So I think we're quite happy and they're contributing what we expected to the overall growth rate of the Company, our emerging markets region. So that's what we wanted to see.

(Interpreted). Thank you very much.

(Interpreted). Next question, please.

(Interpreted). [Matsahura] from [Asahi] Newspaper. I have two questions. The first is on Japan-based performance. In sales you have an increase, but operating income and ordinary income is down and the reason is, one, FX impact. The FX is negatively impacting your income. And I suppose the yen depreciation trend will continue. So what kind of actions do you take to address that?

And the second is you have reached high pipeline and you expect good growth. And Mr. Hasegawa, what do you think of wage hikes for the industry? You are also participating in the government panel.

Francois, can you handle the first question?

On the first question, the impact of the foreign exchange is quite negative in the quarter on the operating income, mainly because of the impact in intangibles, goodwill reevaluation because the goodwill of the acquisition of the two companies that we did is denominated in US dollars. So it increased quite a lot on translated in Japanese yen, so it put some negative pressure on the operating income. This is something that we can't forecast, obviously. And so we make an assumption for the coming quarters. What we presented as a guidance, as you could see, is we made an assumption that the exchange rate will remain at current level. It may happen differently, obviously.

(Interpreted). Regarding the second question, we haven't talked anything with the union. Sorry, I can't say anything. But I have instructed HR department they can possibly consider an option.

(Interpreted). Thank you. Next question, please.

(Interpreted). Thank you. I'm (inaudible) from Nikon (inaudible)Newspaper. I have two questions. Dr. Yamada talked about R&D, the cost per compound. 40% reduction is the target and you also mentioned another 30%. When this new target will be starting? And is it, in total, 60? What is meant by additional 30%? Is it in total 60% reduction? And how to achieve those?

The per activity depends on the number of compounds on a fixed base of expense. And what we've done is we've increased the number of compounds. For example, two years ago the number of INDs coming out of the Shonan Laboratories was two. Last year it was seven. This year we anticipate it may be as high as 13. So we've had significant improvement in the number of INDs coming from our research laboratories. And I think we're reaching a very, very good new steady state.

(Interpreted). Next question, please.

(Interpreted). Masayuki Onozuka from JP Morgan Securities. I have two questions. First, JPY70b was your initial planning operating profit and then you have the number of JPY100b. What's the impact of Project Summit in the actual numbers you achieved?

We don't disclose the return on the contribution yet. As I said, we expect to give more information and more detail, starting from the end of March 2014 on the real contribution of Summit. We have not provided any detail at this stage.

The important thing though is, as I mentioned, you could see that our cost base has decreased in absolute value, so which is a good indication. You could see that cost base, both in R&D and SG&A has decreased by about 13% in the quarter from a year ago. So it gives you a rough indication of what we have.

I don't want to say that everything is coming from Summit. But there is one significant part coming from Summit initiatives.

(Interpreted). So at the end of the fiscal year, you will be clearly indicating the contribution of the Project Summit. We have no way of knowing whether it's coming from the Project Summit or from some other sources. We have no idea of breakdown. Would you be very clear when you announce at the end of the fiscal year?

We will give more information, yes. At this stage, as I said, the majority of the work that has been done was to benchmark cost base against the competition was to set targets, was to identify initiatives. So, we are starting to deliver on some of them and we can early results already. I think there is a time now where we are coming in order to do the tracking and the following and the follow-up of this initiative and then we will start reporting in, six months from now.

We believe it is important that we provided, obviously, more information on the contribution of this project. It's a major project that is involving all activities in the Company. So, we understand the need to communicate and to report more to you, and so which we will do from the end of our fiscal year.

(Interpreted). I have another question to Mr. Hasegawa. The legacy Nycomed (inaudible), after integrating them as one Takeda you have been running. But operation-wise, I think that Takeda's way of doing this is just opposite to Pfizer's. And your, let's say brand generic business, is it really a highly profitable business, oncology unit? How it's -- the operating margin is different from the primary care? Can you manage and control that way, having those re-integrations?

(Interpreted). Well sorry, I'm not familiar with the ways that the Pfizer is taking. But regarding management by business, Francois, I think will do it with a clear understanding. But how to do it specifically, I cannot promise to disclose those details when. But, of course, the productivity improvement shall be duly followed up.

And also, one comment was made by Mr. Francois regarding the Summit reporting and the tracking. If I make some additional explanation. Just the other day, we had a meeting on Project Summit. And there we discussed and confirmed the detailed form of tracking. Therefore, each unit makes a report starting from this second half. And then how to share those information, that's a separate issue. But those reports will be made. And then, with them, I think that we'll be ready to give you more details regarding the contributions from Project Summit.

(Interpreted). Thank you very much for many questions. But the next question will be the last question because of the time constraint.

(Interpreted). Muraoka from Morgan Stanley. Regarding performance for the year where you kept the guidance unchanged and you said there will be more expenses in the second half and Brintellix launching will be in December, therefore, more weight of spending in the fourth quarter. At the end of the third quarter, you will be very close to JPY140b, but still you would not revise your guidance for the year? I have that impression. You need to raise the guidance otherwise, like last year in the fourth year, there could be a significant decline. That may be an impression that you may give. So you didn't think about that when you think of the guidance for this quarter?

We revised carefully the guidance for the quarter on -- as we can see on page 18 of the presentation. Indeed, when you look at the distribution of the operating income between the two semesters, you could conclude that we should raise the guidance.

First of all, we look carefully because we just did a fresh estimate of our full year. And we confirmed the guidance. But I said we confirmed the guidance with full confidence.

I prefer as well, and you can understand in my position, just having joined the Company, I frankly prefer to under-promise and over-deliver than the reverse. Don't conclude from that I'm not announcing that we are raising the guidance. Don't misunderstand what I'm saying. But what we saw clearly, and this is what happened last year, is that we expect clearly to have more operating -- more expenses coming in the second part of the year, both on the commercial side, with the launch of Brintellix in the US, which, by the way, we will announce early next year and not in December -- and, for example, Vipidia in Europe.

But it is on the R&D side as well. We know that there is a phasing that will bring more costs into the second part of the year, investing more on TAK-875 and MLN9708.

That being said, we will review the guidance in three months. And we will come back to you again in three months. And there we will have a much better visibility of the year. So, we want to be on the safe side. And whatever we say now, we want to make sure that we will deliver it.

(Interpreted). Just additionally, for example, in the second half, the cost, G&A and R&D, the weight is significant for the third and fourth quarters compared to the first and second, r which is more heavier? Third quarter or the fourth quarter?

We don't disclose the weighting between the third and the fourth quarter. Some of it we don't even know exactly when it's going to fall, if it is in Q3 or in Q4. So it is difficult for me, at this stage, to tell you if we will know precisely everything, if it will be booked in Q3 or in Q4. Some of these expenses may fall in one quarter or the other.

So, at this stage, I can only give you information for the full year and for the second semester, but I can't give you precise information for Q3 and Q4.

(Interpreted). Thank you very much. With this, we would like to conclude today's earnings report. Thank you very much for your participation.

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call.  The interpreter was provided by the Company sponsoring this Event.