Takeda Pharmaceutical Co Ltd (TAK) 2015 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 sentiments, liquidity of secondary markets, level and volatility of interest rates, currency exchange rates, security valuations, competitive conditions and size, number and the timing of transactions.

(Operator Instructions). Now we start the conference. Mr. Hohman, please go ahead.

(Interpreted). Thank you very much for your participation in the conference call of the first-quarter financial results for fiscal-year 2014 of Takeda Pharmaceutical Company Limited. My name is Christopher Hohman, Senior Vice President of the Corporate Communications Department.

Now please let me introduce today's presenters and the panel; Mr. Francois Roger, Chief Financial Officer; and Mr. Tsudoi Miyoshi, Head of CMSO Office.

First we would like to start with the presentation of the update related to R&D activities followed by the first-quarter financial results for fiscal-year 2014. After that we will a question and answer session.

Now we will start the presentations. Please have the presentation materials to hand. First of all, we'd like to start with the presentation from Mr. Miyoshi.

(Interpreted). Good evening. My name is Tsudoi Miyoshi, Head of the CMSO Office. Today I would like to give you an update of recent events in Takeda's R&D.

I will cover the following topics; pipeline stage-ups since FY 2013 financial announcement; efficacy data of VELCADE in patients with previously untreated mantle cell lymphoma; Brintellix data presented at the International College of Neuropsychopharmacology World Congress and American Society of Clinical Psychopharmacology Annual Meeting; and details of our strategic alliance with MarcoGenics for autoimmune diseases announced in May. Next slide, please.

As you can see from the stage-ups since the FY 2013 financial announcement, we had some progress in our late-stage pipeline. In May we got approval of Entyvio for ulcerative colitis and Crohn's disease in the US and Europe.

We understand that this is the first biologic to have been approved for the two indications simultaneously. And we have already launched the product in the US and several countries in Europe, including UK, Germany and France.

Entyvio is a ground-breaking new product that offers a new treatment option to patients with inflammatory bowel disease who have failed to respond with existing products and we expect this product to become a blockbuster global product for Takeda.

Entyvio's phase III trial is running in Japan. We will continue activities toward launching this product in other regions, including Japan. As you can see, we have already initiated trials of a subcutaneous formulation of Entyvio. We are pushing forward to develop this product into a blockbuster.

For Velcade we filed in the US for front-line mantle cell lymphoma. And later I will introduce the data that supported this filing, which was -- which we presented at ASCO in Chicago in June.

For MLN9708 ixazomib, trials are currently ongoing in relapsed refractory multiple myeloma and newly-diagnosed multiple cell lymp -- multiple myeloma. And in this quarter we initiated an additional phase III trial in the US and Europe for maintenance therapy.

In Japan we started phase III trial for our combination of Nesina and Metformin. As you know, this combination is already available on the market in the US and Europe.

We are moving forward diligently to deliver this product also to patients in Japan as a new option for Type II diabetes who still need better glucose control.

In the mid-stage pipeline antibody drug conjugate MLN0264 progressed to phase II for advanced gastrointestinal malignancies. We are accelerating the development of this compound and we believe that it has potential to be a first-in-class product.

As you can see in the early stage of development, we have started clinical trials for two new compounds. TAK-058 is the 5-HT3 receptor antagonist that we obtained through the acquisition of Envoy for the treatment of schizophrenia, especially cognitive impairment associated with schizophrenia.

TAK-935 is another new compound in the CMS area. This is a small molecule that works by potently inhibiting cholesterol 24-hydroxylase. The next slide.

Here you can see the data presented at the American Society for Clinical Oncology meeting in June, evaluating the efficacy of Velcade in patients with previously untreated mantle cell lymphoma.

In this study we compared with rituximab, cyclophosphamide, doxorubicin and prednisone plus vincristine R-CHOP to a regimen where vincristine is replaced by Velcade, or VR-CAP, in patients with newly-diagnosed mantle cell lymphoma.

The Velcade arm showed a statistically-significant improvement in progression-free survival in the assessment by the Independent Radiology Review Committee. Based on this positive result we filed a submission to the FDA for this indication.

Next I will introduce two sets of data about Brintellix. Firstly, this slide introduces data from the International College of Neuropsychopharmacology World Congress, showing the efficacy of Brintellix on cognitive function in adult patients with major depressive disorder. The primary endpoint of the study was the mean change in DSST from baseline at week eight.

The DSST is an objective neuropsychological test associated with executive function, processing speed and attention, and is used as a scale to evaluate the effect on cognitive function. In this study Brintellix showed a statistically- significant improvement over placebo.

In contrast, Duloxetine did not show a statistical significance over placebo in this endpoint. Also Brintellix and [Vortioxetine] were both better than placebo, with statistical significance in reducing the MADRS total score from baseline at week eight, showing efficacy in treating depression and validating the clinical study.

Furthermore, path analysis indicated that Brintellix's benefit from cognitive function was a direct treatment effect rather than a general effect due to alleviation of mood and depressive symptoms. Next slide, please.

Allow me to introduce data presented at the American Society of Clinical Psychopharmacology Annual Meeting, comparing Brintellix with Escitalopram in patients well treated for major depressive disorder and experiencing treatment-emergent sexual dysfunction.

In the Brintellix arm there was a significantly-superior change in the CSFQ-14 total score at week eight compared to the Escitalopram arm. CSFQ-14 is a clinical research instrument to score assessment of sexual function.

We believe that the data from this trial, showing Brintellix's superiority over Escitalopram in improving sexual function in patients well treated for major depressive disorder and experiencing treatment-emergent sexual dysfunction, will enable us to offer a new benefit to patients.

As we announced in May, we have entered into an option agreement with MacroGenics for development and commercialization of a product candidate MGD010. MGD010 incorporates the dual-affinity re-targeting platform, or the DART platform, to simultaneously engage CD32B and CD79B, which are both B-cell surface proteins.

It is expected that the engagement of CD79B enables specific binding to the B-cell surface and the simultaneous action of CD32B inhibits excessive activation of B-cells. It is currently in pre-clinical development for the treatment of autoimmune diseases.

Finally, I will introduce a slide of our approval schedule. You can see we have already obtained approval this year for Entyvio in the US and Europe. Regarding the MLN9708, or ixazomib, projected approval timing in the US and Europe for the indication of relapsed refractory multiple myeloma has been changed from FY 2015 to FY 2016. Allow me to explain the background to this.

At present patient enrollment has been completed and the trial is ongoing. It is an event-driven study as the primary endpoint is progression-free survival, or PFS, which makes it challenging to predict the precise timing of completion of the study. As of now, pace of events is a bit slower than our original projection.

We expect the data and submission in FY 2015 and approval in FY 2016. This does not mean that there is any problem or concerns with the trial itself. We are very confident in ixazomib and we will diligently pursue our development in order to provide the product to patients with multiple myeloma as soon as possible.

Next Francois Roger will be giving you the financial results.

Hello, I'm Francois Roger, CFO. Thank you for joining this conference call today. I will discuss today our financial results for the first quarter of fiscal 2014.

I will also touch on the relevant information about our growth, innovation and efficiency initiatives. And I will comment on how our Q1 results fit into our full-year guidance. I would like to start with a few quick notes on our disclosures for our result this quarter and going forwards on slide 1.

As we have communicated previously, Takeda now transitions fully to IFRS from this reporting period onwards. Further, we are introducing core earnings as our key profit performance measure for easier comparability across global peers.

Core earnings uses operating profit and excludes items such as purchase accounting and amortization or impairment loss of intangible assets, restructuring cost and litigation cost.

Core earnings is also a measure that we have used for our mid-range guidance for some time and which is also used for short- and mid-term management performance and reward.

In addition we will be disclosing both sales and core earnings on the basis of reported and underlying growth. Underlying only makes two adjustments, one is constant foreign exchange and the second one is removing disposal acquisitions and, if any, exceptional items.

We believe this underlying growth will give a better and simpler view of our real performance. These concepts are provided in more details in the appendix section.

Finally, after having carefully listened to both shareholder and analyst, and in order to increase transparency, from this quarter onwards we are now disclosing core net profit, core EPS, as well as information about our normalized core tax rate.

Slide 2 includes the items that I will cover today. With that, let's move directly to the key highlights of the quarter on slide 3.

First of all, Q1 results show a temporary slowdown in sales growth as a result of specific events this quarter, including the biennual Japanese national health insurance downwards price revisions as well as reductions of inventories at wholesalers in emerging markets.

As a result we don't see Q1 as an accurate proxy of our future growth. It is important to note that these results are fully in line with our expectations and with these announcements, therefore, we maintain our full-year sales and earning guidance.

Looking at product performance in Q1 Velcade, Colcrys and Dexilant grew steady, while Brintellix started to contribute with the sales level in line with our expectations.

An example of our innovation includes our breakthrough product, Entyvio, a new biological therapy for UC and CD which has now begun addressing unmet medical need of patients both in the US and in Europe. Also project summit continues to produce strong results, including JPY5b additional savings generated in Q1, and I will touch on this in a moment.

Next, please look at slide 5, for a closer look at the factors affecting our revenue specifically this quarter.

Significant divestments totaling JPY6.2b impacted Q1, such as OTC products in Germany that we sold as well as the conclusion of certain product license agreements, such Edarbi in the US and [Celltouch] in Japan. Underlying revenue growth stood at minus 0.2%, leading to reported revenues of JPY411b in the quarter.

Please move to slide 6. Looking more closely at underlying revenue growth in Q1 we are satisfied to see solid momentum in new product sales that contributed to revenue growth of 4.3%, while the base business was impacted by the factors I mentioned and that are shown on this slide.

Slide 7 shows the underlying revenue growth by region. Here again, emerging markets and Japan were impacted by specific events this first quarter.

In emerging markets we had a one-off impact from inventory reductions at wholesalers. However, keep in mind that we do confirm that emerging market revenue growth for the full year is expected to be in double digits, as it was last year.

In Japan our revenue growth will be positive if we exclude the impact of the NHI price revision. At the same time we are pleased with the growth of our combined ARB family in Japan, ARB -- I mean by ARB Candesartan and Azilva combined.

Let's move to page -- to slide 8. Emerging market revenues in the quarter showed a wide range of performances. A temporarily weaker growth rate in Q1 was mainly due to distributor inventory optimization mainly in CIS and LatAm, and lower sales in Ukraine and Venezuela due to the political situation. We actively manage this reduction of inventory levels.

When looking at in-market or ex-distributor revenue in emerging markets we see that Q1 growth was at high teens according to IMS data at the end of May, which is fully in line with our experience last year. Furthermore, as I mentioned, we forecast reaching double-digit growth in emerging markets on a full-year basis, as we did last year.

On slide 9 you'll find the performance in Q1 of our top-10 products. Again, revenues reflect growth of new products, while our base business was impacted by the NHI price revision and inventory reduction in emerging markets.

We are pleased to see the positive development of; Pantoprazole plus 7.3%; Velcade plus 8.8% even after having been launched over a decade ago; and Dexilant plus 8.8%; among others.

The switch from Candesartan to Azilva in Japan as I mentioned, is moving well as both products combined are showing positive growth of 7% year on year.

Slide 10 looks at the growth of new products with the examples of Adcetris and Brintellix. Adcetris, mainly in Europe, continues its strong performance over the past 12 months and in the US Brintellix has grown since launch in line with our expectations.

Slide 12, shows the breakdown of expenses for your reference. Our underlying core earnings were flat versus last year, slightly better than our expectation due to some favorable timing of expenses. This happened despite our promotional investment in new products.

Looking closer at the individual expense items, page 13, you can see that our sales and marketing investments for growth have increased to support our new products, mainly Brintellix and Entyvio, as we announced at the beginning of the year, while we have continued to reduce G&A expenses to bring more efficiencies as part of our project summit.

Moving to project summit on slide 14 and, as I mentioned in the highlight, project summit continues to produce strong results. For example, in Q1 we included JPY5b of additional savings due to this project.

And we now expect to cumulatively save an estimated JPY60b by the end of the year -- fiscal-year 2014, which means already half of the five-year targets through 2017, which we even increased in May from originally JPY100b to JPY120b.

Slide 15 introduces the additional disclosure we are now providing for tax. We realize that in the past several exceptional items have made our tax situation a little bit difficult to understand.

The reconciliation between our reported tax rate and our normalized core tax rate helps to understand the underlying effective tax rate, which actually stood at 32.3% in Q1, 2014. This level of 32% is quite similar to what we have recorded over the last two years, which we show in the appendix.

In general the normalized core tax rate this quarter can be considered as a fair proxy for our tax rate excluding one-offs. In the short to mid range we therefore expect our underlying core effective tax rate to be in the low 30s.

Slide 17 gives additional new disclosures aimed at providing transparency. Here you show core EPS, core effective tax rate, core net profit and core EPS. Our core EPS in Q1 has been impacted, as we show on the previous page, by one-off tax impacts.

Slide 18 describes what we believe to be a strong balance sheet.

Moving to slide 19, the Company shows a slight net debt position after the payment of a final 2013 dividend during the period. Overall the profile of our debt illustrates the satisfactory level of liquidity that we benefit from.

Let's move to page 20. Takeda's CapEx is high this first quarter, which is mainly related to some specific phasing of CapEx projects. Our operating free cash flow was impacted in Q1 by the unfavorable phasing of payments for operating expenses, for CapEx and milestone payment for business development.

In Q1, for example, as far as OpEx is concerned we have accumulated the payment of a high cost that we book traditionally in Q4. This happens actually every year, so we usually have less cash flow generation in the first quarter of the year for the same reasons. As a result of this factor we expect our free cash flow to improve during the full year.

Finally, I will conclude with slide 21 with -- by reiterating our full-year guidance. As I said, we consider the full-year 2014 as a year of investment for growth and Q1 as a quarter that is impacted by some temporary headwinds. We don't see as a consequence Q1 as a good indicator of the rest of the year, which we expect to be stronger.

Now let's open the call up for your questions. Thank you.

Citigroup Securities, Mr. Yamaguchi.

(Interpreted). Hello, do you hear me?

(Interpreted). Yes, go ahead.

(Interpreted). Yamaguchi from Citigroup. My first question is about Brintellix. Sales disclosure is not available, but you mentioned things in plan. But JPY180m for the year was the plan and according to the current pace you are not going to reach that goal. But what's the reason why you say that things are moving according to the plan? That's the first question.

And the second question is about the financial results. As I listen to Mr. Francois Roger, the first quarter, especially in the revenue, is weak. You indicated that.

But when you look out at the expenses and cost it in comparison to the annual costs for the year expenses are less. So probably profit is not so bad. That's the impression.

But still you think the performance was not very strong. Is that because the sales was a bit weak and for the costs you're going to spend more costs? Is that reason? Those are two questions that I would like to address.

Okay, regarding Brintellix, as I said in -- as at the end of June after -- or, let's say, roughly speaking about six months of sales of Brintellix we are basically in line with what we had built in the plan.

Obviously, the amount that we had, of [JPY100m] for the full year, is for 12 months and there is a ramp up during the year. It's too early to draw any conclusions. The only thing that we could say is that we were very close to what we expected in the first six months.

As you can see on slide 10, the amount of sales is increasing month after month and so we will provide more disclosure. But, once again, after six months we were in line with our original plan, which -- the plan led to [JPY100m] of sales in the full year.

Regarding Q1, as you said, we consider that the quarter is on the weak side in terms of sales, but once again it is fully in line with what we had built in our model and in our plan. So there is no specific concern at this stage.

As I described, there were some specific events and one of them being the inventory adjustments in emerging market that hit our sales this quarter. As you rightly mention, the profit is not so bad, linked to the fact that we have less expenses than expected.

That being said, we had some exceptional items as well, because, as you may have seen, we had some write-off of tax, 700, for example, that we [stopped] during the quarter. But you're absolutely right that we -- sales are on the weak side, but once again in line with our expectation. And profit is slightly better than what expected.

I would like to be careful there, though. I don't want to draw any conclusion in terms of profit for the full year. We reiterate the guidance, but we know that there is always -- might be a different phasing during the year. But once again we are confident of reaching our guidance of 2% to 4% probably for sales and flat to slightly declining in core earning for the full year.

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

Mr. Seki, Barclays.

(Interpreted). Thank you. I'm Seki from Barclays. (Technical difficulty).

Seki San, the line was actually very bad so we could not hear properly the question you ask. Could you ask the question again? I am sorry about that.

(Interpreted). Are you talking about my first question? Should I repeat my first question?

Can you repeat both questions, because we did not -- we could not hear? There was a problem on the line.

(Interpreted). Excuse me, my first question was -- can you hear me now?

GSK has been trying to sell their product (technical difficulty) of EPP and I'd like to ask you a question regarding (technical difficulty) your M&A (technical difficulty) some older product portfolio? Do you have [currently] interest in purchasing those older product portfolio? That's my first question.

And then this week, according to the Express, well, there seems to be some change on the [formal] listings expected this week. And I would like to ask you whether or not your product position or status in formerly is secured. Especially I am interested in Dexilant situation.

Okay, regarding the question regarding mature products from GSK, we don't comment usually on M&A, but I can tell you anyway that this not an option that we are pursuing, the acquisition of the specific product line that you were mentioning.

The second question, I'm not aware of any change that is affecting the product you mention in Japan at this stage.

(Interpreted). Please, the participants on Japanese line please ask the questions in Japanese because of the technical conditions. Thank you.

Morgan Stanley MUFG Securities, Mr. Muraoka.

(Interpreted). Good evening, this is Muraoka speaking. Can you hear me?

(Interpreted). Yes, go ahead.

(Interpreted). The delay of 9708 submission and approval timing the data availability is difficult to predict. But is that going to be the first half or second half of FY 2015?

Based on the current pattern, when in 2015? I don't think this is decided yet, but in the interim analysis possibly you can have the earlier submission or approval. That's the first question regarding 9708.

The second question is about Pantoprazole. According to your plan it's going to [the decrease] of 12% and was very weak, but in the first quarter it was actually plus 12%, with constant currency 7% to 8%. Is that because your estimate -- initial estimate was rather conservative? Those are two questions, thank you.

(Interpreted). Mr. Muraoka, regarding the question 9708, when the disclosure is going to be available for the data or when the analysis of data is completed, which timing are you talking about?

(Interpreted). Both. So when can we have announcement regarding the data? When would be the first announcement from your side to us?

(Interpreted). As I said before, [rebrimet] plus dexamethasone plus placebo and dexametazone and rebrimet plus 9708, those two arms are compared as of now. The data is being landed. And the total event incidence is slower than our projection. There are various reasons. But it is blinded phase, so we don't really know the reason why, but the speed or the pace is rather slow.

And the other company studies of event driven that is sometimes observed. As of now we can't tell you exact timing when the data will be available. But at least up to 12 months' timeframe we would like to make submission and 12 months meaning from the original plan. But they will not be beyond 12 months.

(Interpreted). Okay, so submission within 12 months. So that means next calendar year in the first half you will at least have the results?

(Interpreted). No, within FY 2015 we will be able to file, we will be able submit, that's what I said.

(Interpreted). Thank you very much. And the second question, please.

Regarding Pantoprazole, indeed, the performance was good in Q1. The thing that we have done better than in terms of trend that what we expect for the full year is largely linked to the fact that Pantoprazole is reaching the LOE status in some emerging markets, so sales could decline in the future.

It happened that Pantoprazole has been more resilient than what we expected initially. So I would say so far so good, but we can expect maybe more pressure going forward due to some LOE in selective emerging markets.

(Interpreted). Next question, please.

Mr. [Sato], [Schroeder] Management Investment.

(Interpreted). Yes, please, my first question is regarding the Brintellix. Cognitive function improvement seems to be due to more direct effect and not treating the depressive disease. This is going to be a very strong appealing point in medical practice.

However, looking at the current data the current curve of the [precision] number increase doesn't seem to be too strong. And have you already completed your [opening accounts] activities in the US?

(Interpreted). I think that your question is actually two-fold. Access means you're talking about managed care, right?

(Interpreted). From myself, from R&D perspective, I'd like to talk about some data. Yes. And also wasn't it showing the remarkable differences?

(Interpreted). Not much, but you may be able to pursue indications further down the depression. Is that what you said?

Well, about the data you mentioned, generally speaking in a company with a depression cognitive function declines, therefore, there is a data that if depression improves then cognitive function also improves.

However, between Duloxetine and Brintellix as a result of testing them for antidepressant treatment both were effective, whereas, Brintellix didn't show the differences in terms of cognitive function treatment. However, [Brintellix] did. Therefore, Brintellix seems to be having some direct effect onto cognitive function.

However, in terms of the promotion or indication the data it's not included. Therefore, in the US the reps cannot promote it directly. So as of today what we can say is that when the data is available, but the data is not currently used in promotion.

(Interpreted). I understand. And in the future don't you plan to promote the product using this data?

(Interpreted). We don't have a plan to include this in our indications. However, because we could have this very good data how can we use this data effectively? We would like to consult with the authorities and we would like to review and decide it.

(Interpreted). Thank you very much. May I ask the second question?

^ (Interpreted). Yes, please.

(Interpreted). The second question is about your alliance with MacroGenics. And I would like to ask this question to Mr. Miyoshi.

So it is an autoimmune disease relating to B-cells. I think a typical one is [SAD] and it's already introduced looking at the website of MacroGenics. But from a more expanded business viewpoint what kind of other autoimmune diseases that you can possibly consider?

(Interpreted). As of today we'd like to pursue a wide range of diseases. Therefore, it's not specifically limited. As you rightfully said, currently we are reviewing SAD, but we'd like to pursue all the possible areas. Thank you.

Mizuho Securities, Mr. Tanaka.

(Interpreted). Tanaka from Mizuho Securities.

(Interpreted). Please go ahead.

(Interpreted). I have only one question. 9708 is now in phase III regarding the maintenance therapy trial. As long as I see the clinical trial timeline, February 2018, is that right regarding the timing of clinical trial?

(Interpreted). We started July -- sorry, my, microphone was off, so probably you could not hear me.

The study itself started July already. And it would take five years because the primary endpoint is OS, but we will have interim analysis and based on the interim analysis we can make submission. And that's the timing that you mentioned.

(Interpreted). This is a comparison against placebo. I suppose rebrimet is often used for maintenance therapy, according to what I understand. And a head-to-head comparison with rebrimet is that in your plan?

(Interpreted). Rebrimet does not have indication for maintenance therapy. In multiple myeloma maintenance therapy is performed, but the standard care is not quite established yet. And in that sense how 9708 can be used and be effective for maintenance therapy? And that is the focus in our comparison data against placebo. Thank you.

(Interpreted). Next question, please.

Mr. Sakai, Credit Suisse.

(Interpreted). I would like to ask you two questions. One is emerging market sales; in Russia and Mexico you mentioned about inventory levels reductions affected.

In these markets, in order to improve the profitability, do you have already some plan ongoing? And when you say inventory level reductions what are the reasons behind? Especially I'm concerned with Russia. Could you give us more specifically what's happening in those markets?

And looking at the slide 8, in footnote it says please refer to page 27, but page 27 shows the core EPS. So I think it's not the right page. If you modify this later please also tell us.

And my second is regarding your disclosure of core earnings. That's been disclosed last time too and you used this for a major performance indicator. And regarding stock order contributions I think that previously the President made a commitment that the dividend level will be maintained until FY 2017.

And then the payout ratio, or how to use cash. Including all those perspectives did you come up with the disclosure of core earnings? Just simply showing core earnings is not so meaningful. Therefore, I would like to ask this question to someone -- the financial expert, please.

Okay, let me answer first the question on the emerging market inventory level. Just to reassure everybody, the Russian situation has nothing to do with any political situation in any country, apart from what I mentioned in Venezuela or in Ukraine.

In the Russia the situation is totally different. We had for some time, for several years a rather high level of inventory with the wholesalers in Russia. And there are two reasons for it.

One of them is the fact that we have moved from exports to local manufacturing after we built the plant in Russia and the transfer required some higher level of inventory.

The second one is that we had to change as well in Russia, as in other countries, but in Russia we did it as well to move the packaging of former Macro-made products to Takeda brand. And to do that you cannot import for some time, so we had to do it to get additional inventory for some time as well.

Now this issue the re-branding to Takeda and the establishment of our manufacturing unit are behind us, so we can come back to a normal inventory level at the wholesalers. And we decided this is something that we manage our selves to bring that level back to market levels. There is a one-off to take, which we took in Q1.

Mexico is a different situation. There is nothing either linked to any new political situation whatsoever. But in Mexico one wholesaler which has a significant market share is having some financial tensions.

And we decided to have a more stringent policy in terms of credit from a credit point of view and, therefore, to reduce the inventory level globally in the country. So it's a very specific situation which should come back to normal over time.

So these are pure one-off that happened in Q1 and they're not likely to happen again in the future.

Regarding core earnings, this is a performance indicator, indeed, that we had introduced for some time. We just mentioned now that this is the main indicator that we use to communicate externally as far as profit is concerned.

This is an indicator that we have provided as well in terms of long term guidance -- medium-term guidance until 2017. We believe it is a relevant KPI as well, because it allows to benchmark our performance against our competitors.

You were mentioning about shareholder contribution. I want to correct something that you said. We have not provided a guidance or any indication in terms of shareholder remuneration and, more specifically, a dividend until 2017.

We have only indicated that we would maintain the dividend as it is today in absolute value for the year 2014 and 2016 -- 2014 and 2015, to be paid in 2016. We have not provided any indication in terms of a remuneration level after 2015.

I'll take the opportunity to mention that shareholder remuneration is something that we value, which is the reason why we have decided on this dividend which we consider as a testing only of the value that we put to shareholder remuneration, given that it is currently equivalent to a yield of about 3.8%, which we consider to be at the high end of the industry.

You asked about the slide number mentioned.

Yes.

It says see appendix for slide number 27. In fact, slide number 27 and 28 are the only additional information we have about underlying growth. So this should say please see slide 27 and 28.

(Interpreted). Next question, please.

Mr. Tim Race, Deutsche Bank.

Hi, there, this is Tim Race here from Deutsche Bank in London. Just I wanted to clarify what you said on Brintellix. It wasn't quite clear on the translation.

Are you definitely not filing for a label claim for the sexual dysfunction and the cognition, given the very good data that you've got? And if you are not filing for that, could you explain why you wouldn't be filing for that, or do you have access to these plans? That's all, thank you.

(Interpreted). It is not to be included in the label. That's our judgment at present. This data alone is not sufficient to be included in the label.

Going forward, how we can use this data and in future whether we would have additional study to support this we will of course think about that, but this data alone is not strong enough to be included in the label. But this can be a differentiating data, so, including that, we will discuss with the regulators and we will discuss among ourselves furthermore.

Thank you.

(Interpreted). Next question, please.

(Operator Instructions).

(Interpreted). Thank you very much. It seems there are no more questions. We would like to close Q&A session. Thank you very much. This is end of the conference call today. 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.