Astellas Pharma Inc. (OTCPK:ALPMF) Q3 2022 Earnings Conference Call October 31, 2022 4:00 AM ET
Kenji Yasukawa – Chief Executive Officer
Yoshitsugu Shitaka – CScO, Chief Scientific Officer
Minoru Kikuoka – Chief Financial Officer
Tadaaki Taniguchi – Chief Medical Officer
Bernie Zeiher – Chief Medical Officer
Hiromitsu Ikeda – Corporate Head, Advocacy and Relations
Conference Call Participants
Hidemaru Yamaguchi – Citigroup Securities
Motoya Koutani – Nomura Securities
Fumiyoshi Sakai – Credit Suisse
Shinichiro Muraoka – Morgan Stanley MUFG Securities
Kazuaki Hashiguchi – Daiwa Securities
Akinori Ueda – Goldman Sachs Securities
Seiji Wakao – JPMorgan
Stephen Barker – Jefferies Securities
Thank you very much for your participation in this is the FY ‘2022 Second Quarter Financial Results Earnings Call. I’m Ikeda from Corporate Advocacy Relationship serving as the moderator for today. Thank you very much for this opportunity.
This call is given by a Zoom webinar, as well as they are Live Streaming. We make the presentation first, then we will have Q&A Session afterwards. The questions can be accepted only from webinars, not from the live streaming. And also the simultaneous translation service in Japanese and English is available. For those participating with the Zoom Webinar from the Zoom screen menu, please select your preferred language. And today’s presentation is going to be given in-line with the presentation material on the website.
The participants for today Representative Director, President and CEO, Kenji Yasukawa; CScO, Chief Scientific Officer, Yoshitsugu Shitaka; CFO, Minoru Kikuoka; CMO, Chief Medical Officer, Tadaaki Taniguchi. These four are here with us and Yukio Matsui, Chief Commercial Officer is unfortunately unavailable because of his overseas trip.
All sessions including Q&A will be held in Japanese and simultaneously translated into English by interpreters; accuracy of interpretation cannot be guaranteed. The material or presentation and answers and statements by representatives for the company in the Q&A session includes forward-looking statements based on assumptions and beliefs in a lot of the information currently available and subject to significant risks and uncertainties.
Actual financial results may differ materially depending on the number of factors. They contain information of pharmaceuticals including compounds under development, but this information is not intended to make any representations or advertisement regarding the efficacy or effectiveness of these preparations, promote unapproved use in any fashion, nor provide a medical advice of any kind.
Now Mr. Yasukawa, please.
Hello everyone! Yasukawa speaking. Thank you very much for joining our FY22 second quarter financial results announcement meeting out of your very busy schedule today.
Page two is a cautionary statement regarding forward-looking information. I’m going to skip reading this page. Page three is the agenda for today. I will cover these topics in-line with the agenda.
Page four is an overview of FY2022 second quarter financial results. I would like to start explaining from this page. Revenue and profit increased in the second quarter. Revenue increased by 17% year- on-year, and was on track when ForEx impact was excluded.
Also XTANDI, sales in the United States were below initial full year forecast. But strong performance in Europe and Japan covered the underachieving performance in the United States. That said, it showed a strong performance mainly in Japan and sales exceed our initial full year forecast.
COGs ratio was higher than our initial full year forecast due to changes in the product mix. But as we announced last week, considering recent rapid exchange rate fluctuations, the exchange rate used for eliminating unrealized profit was changed from the second quarter to exclude the impact on profit.
Please see slides 20 and 21 for details. SG&A and R&D expenses were controlled in line with the initial full year forecast excluding ForEx impact. As a result, core operating profit increased by 16% year- on-year, even excluding ForEx impact and was in-line with our initial forecast. Full basis operating profit increased by 33% year- on-year.
Next, on page five. I’ve explain FY2022 second quarter financial results. Revenue increased to ¥622.2 billion up 17% year-on-year. Core operating profit was ¥145.4 billion, up by 16% year- on-year. You can see the ForEx impact column on the right hand side of the table.
Revenue increased and profit increased by 4% and 3.3% or even excluding ForEx impact. As I explain on the previous page, second quarter cost of sales does not include ForEx impact from the elimination of unrealized profit. On the other hand, we are not restating our historical consolidated financial statements. So the ForEx impact of the elimination of unrealized profit for ¥0.6 billion remains in the second quarter of FY2021, the bottom half of this page shows a full basis result. Operating profit was ¥119.9 billion up 33% year-on-year. Profit increased to ¥96.4 billion up 34.7% year-on-year.
On page six, let me explain the second quarter results and the future outlook for XTANDI. Due to substantial ForEx impact in the second quarter, we are showing the results in local currencies as well. First, global sales reached ¥332 billion in the second quarter, up by 24% year-on-year and up by 9% when ForEx impact is excluded.
Up to the second quarter the progress was in line with the full year focus. We’ll explain the outlook for the future later, but we continue to expect the challenging market conditions in the United States, and we have made a substantial downward revision of a full year forecast in the United States. We are making an upward revision of a full year forecast in Europe and Japan with strong performance, which is now sufficient to cover the downward revision in the United States. So full year forecast of global sales excluding ForEx impact is revised downward. On the other hand, in spite of the downward revision, we are expecting continued near double digit growth, even with sales already exceeding ¥600 billion.
Next, let me explain the current situation and the future outlook for each region. In the United States second quarter sales reached $1.304 billion growing by 1% year-on-year, 1% based on the local currency. Continuing from the previous quarter, there has been a negative impact from the so called PAP, Patient Assistance Program and competitive generics. We were expecting the recovery in our initial assumptions, but their levels remain higher than our expectations.
New patient starts have not returned to pre-COVID-19 levels and are below expectations. We are assuming that the duration of treatment with XTANDI is 18 months on the average, due to a drop in new patient starts one to two years ago when COVID-19 has the biggest impact. We believe that demand as a basis of our current sales is also being affected. These factors including PAP have a lot of uncertainties, so without expecting an improvement for now, we factored in the challenging market conditions for the third quarter and beyond. As a result, we decided to revise our full year forecast downward to $2.618 billion.
Comparing the first and the second half, it may seem that we are not expecting growth in our plan, but this is due to the impact of the so called Donut Hole or coverage gap on a price in the fourth quarter. On demand basis we’re expecting, an increase by a higher single digit percentage figure in the second half compared to the first half. So we are planning to grow based on the actual demand.
As you know, more than 10 years have already passed since the launch in the United States. Sales have grown to a scale of $2.5 billion, $2.5 billion on a fully year basis and the current indications, big market opportunities are not left for us and XTANDI is shifting to a mature phase in our view.
On the other hand, as the future growth opportunity, MBoC is ongoing with which we are aiming to obtain an additional education of M0 HSPCwe expecting top line results by the end of the current fiscal year. We are expecting for its contribution to sales after approval as a growth driver for FY2023 and beyond.
Next, established markets. Established markets are above initial forecast and contributing to the expansion of global sales the most. Prescription for early stage M1 CSPC shows strong growth mainly in Germany, while Italy and Canada also contributed as well with the start of reimbursement for M1 CSPC, so demand rose substantially by 21% year-on-year.
As for the price, we were able to reach agreement on the price higher than our initial assumptions in reimbursement negotiations in Germany. We reflected these positive factors and made an upward revision of our full year forecast.
In Japan, as a result of active educational and promotional activities by us and our competitors, we are maintaining a high market share in the growing market of novel hormonal therapies with the market expansion higher than expected. Reflecting the situation up to the second quarter, we revised our full year forecast upward.
In Greater China, demand expanded substantially, but due to the impact of intensifying competition, progress is lower than our initial forecast. We are expecting competitive pressure to continue in the third quarter and beyond amid a downward revision of a forecast. However, we are continuing to see Greater China as a growth market.
In the international markets, performance looks strong, but that’s due to early shipment. Excluding that factor, performance is in line with our initial forecast. So excluding ForEx impact, full year outlook is in line with our initial forecast. We have expectations on international markets as a gross market like Greater China.
In the United States XTANDI is approaching a mature phase, but outside of the United States we have expectations through Greater China and international markets in particular as growth market. We continue to expect sales expansion globally as a whole.
Next on page seven, let me explain our strategic product first on PADCEV. Global sales grew to ¥20.8 billion, exceeding our initial expectations. Countries with approval expanded to 41 countries. Regional expansion is making steady progress. Factoring in the strong performance mainly in Japan we’ve revised our full year forecast upward.
In the United States PADCEV is growing in line with our initial forecast. We already achieved the high market share with the current indications. We are expecting significant sales growth after the anticipated approval of first line metastatic urothelial cancer indication.
In the established markets the number of launched countries has increased to 16 since the approval in April this year. Market penetration is exceeding our initial expectations. Reflecting the situation after the second quarter, we made an upward revision of our full year forecast. We are expecting further increase in the number of launched countries. Reimbursement is expected to start in Austria, Switzerland, Belgium and Nordic countries in the latter half of FY2022.
In Japan, market penetration is continuing to exceed expectations such as speed, faster than our initial forecast. New patient starts are substantially above our expectations and the duration of treatment in the clinical settings is actually confirmed to be longer than the clinical trials in many cases, which we think is contributing to sales expansion. Reflecting the market penetration much above our initial assumptions, we made a significant upward revision of our full year forecast.
In the international markets, PADCEV was launched in Singapore in July this year. We are hoping for contribution to sales as we expect an increase in the number of launch countries in the future. The key to global growth in the future is the expansion in the current indications, as well as the additional indication in the first line settings. We’re expecting full scale sales contribution, starting from the United States.
As for XOSPATA, due to the impact of a weak performance, mainly in the United States and Japan, global sales were below expectations. In the United States, the largest market, we maintained a high market share and demand has been increasing, but the market growth was lower than expected as a factor for the slowdown of the U.S. market.
FYQ3 screening rate is already high, but has not reached our goal we set at the beginning of the fiscal year. So new patient starts are below our expectations, according to our analysis. In Japan, increased competitive pressure is serving as a factor for the weak performance. Reflecting these situations in the United States and Japan, we made a downward revision of a full year forecast.
As for EVRENZO, sales in Japan and Europe are below expectations. Factors behind have not changed much from the previous quarter. EVRENZO has continued to be affected by competitive pressure in Japan and low penetration of differentiation from the existing standard of care in Europe. We are expecting launch on reinvestment in France, Italy and Spain in the latter half of this fiscal year, but factoring in the challenging situation up to the second quarter, we made a substantial downward revision of the full year forecast.
On page eight I’ve explained cost items. COGS ratio increased by 0.8 percentage point year- on-year and was above initial forecast due to changes in product mix such as sales increase for XTANDI, ex-U.S. and EVENITY in Japan.
SG&A cost excluding XTANDI, U.S. co-promotion fees increased by 9.5% year-on-year. When ForEx impact is excluded, SG&A expenses decreased by 2.6% or ¥5.1 billion year-on-year and a control in line with our initial focus. Personal costs fell by about ¥6 billion with global optimization of commercial related personnel, aligned with the transformation of the product portfolio.
We are also trying to reduce sales promotion costs related to mature products such as mirabegron, which decreased cost by about ¥4 billion year-on-year. On the other hand, we are making active investment for new product launch readiness for PADCEV and fezolinetant. Sales promotion expenses rose by about ¥4 billion year-on-year. We will continue to allocate our resources to strategic products with higher priority.
R&D expenditure increased by 16.9% year-on-year, but by 4.2% when ForEx impact was excluded. We booked one-time expenses of ¥13.5 billion for using a priority review voucher in the first quarter for the application of fezolinetant. Excluding this cost, R&D expenditure decreased year-on-year. The progress against the initial forecast excluding ForEx impact was high at 52%, but the use of a priority review voucher was already factored in at the beginning of the current fiscal year and this is in line with our initial focus.
Next on page nine, I’d like to explain a revised FY2022 full year forecast. First, we reviewed our ForEx rate assumptions and decided to use ¥140 against the U.S. dollar and ¥140 against the Euro for the third quarter and beyond. In our revised forecast, revenue is expected to increase to ¥1.529 trillion up by ¥86 billion from the initial forecast announced in April. ForEx impact is raising our revenue by ¥115.5 billion. So in reality this is a downward revision by about ¥30 billion.
As I explained on page six, we expect XTANDI’s challenging market conditions in the United States to continue in the third quarter and beyond. Sales forecast excluding ForEx impact was revised downward. On the other hand, we made an upward revision for Europe and Japan with performance higher than our assumptions. SG&A costs as a whole are expected to reach ¥642 billion, up by ¥44 billion, mainly due to ForEx impact. U.S. XTANDI co-promotion fees will decrease, along with the downward revision of sales forecast in the United States, but will slightly increase on our Japanese yen basis due to ForEx impact.
R&D expenditure will increase to ¥278 billion up by ¥24 billion. According to a forecast we factored in a ForEx impact, an increase in inventories related to commercial production of zolbetuximab for about ¥6 billion. These factors could reduce the core operating profit, but partly due to positive ForEx impact we decided to keep ¥290 billion in our revised forecast.
The core operating profit margin expected to fall by 1.1 percentage point from our initial forecast. This is mainly due to an increase in cost of sales ratio, as well as a one-off factor, an increasing on the expenses from an increase in inventories related to commercial production of zolbetuximab. Our full basis forecast remains unchanged as there is no particular event beyond our expectations.
Page 10, here’s the description of our initiatives for sustainable growth. On page 11, we discussed the progress of key events expected in FY2022 for XTANDI and our Strategic Products. Because the onset of events are happening later than originally anticipated, the expected timing of obtaining top line results from the EMBARK study has been moved to the fourth quarter. Accordingly, we expect filing in the following fiscal year or later.
Regarding PADCEV, based on the positive efficacy results of the EV-103 study including Cohort K we discussed with the FDA and submitted sBLA in October for an additional indication of first line locally advanced metastatic urothelial cancer who are Cis-ineligible. In addition, we obtained positive results from a bridging study in China in treated metastatic urothelial cancer.
The application for fezolinetant was accepted for review in the U.S. in August, and the FDA has set the PDUFA target date, February 22nd next year. The filing in Europe for fezolinetant was also accepted in September. Other updates include the fast track designation granted from the FDA for extended for the treatment of M0 CSPC and zolbetuximab for the treatment of gastric and GEJ adenocarcinoma. We look forward to further accelerating the development of these compounds and the timings of the duration to the launch will to be shortened.
On page 12 I described the key success factors and development progress for Fezolinetant in the U.S. and Europe where we have submitted filing. It is estimated that there are approximately 10 million patients with moderate to severe VMS who are eligible for Fezolinetant in both the U.S. and Europe. In the case of Europe, it’s about 30 million.
In both markets, we believe it is important to raise awareness of the VMS and to promote Fezolinetant’s non-hormonal properties, but there are differences in the market environment. Based on the market research conducted by ourselves, we recognize that in the U.S. it is relatively easy for patients to communicate their intention for prescribed drugs to their physicians and therefore educating VMS patients to seek treatment with non-hormonal agents is an important initiative.
In Europe on the other hand, the first important approach is to make sure that the patient’s recognize VMS as a treatable disease and actively go to their doctors for consultation. In terms of pricing and reinvestment in the U.S. with pharmaceutical companies can have the right to set the price. It is important to create an environment in which patients have optimal access to new non-hormonal products through private insurance.
Whereas in Europe where governments are involved in setting prices, the key to success is to obtain reversement on prices that reflect the product value in each country. In the progress and development related to reimbursement in Europe, the patient enrollment in the Phase 3b DAYLIGHT study was completed faster than planned.
For the SKYLIGHT study, which was conducted for submission in the U.S. and Europe and the late stage Phase 2 SKYLIGHT study being conducted in Japan, both were also completed enrollment earlier than planned, indicating that both healthcare professionals and patients participating in these clinical trials are highly interested in non-hormonal treatment of VMS.
On page 13 I would like to explain about the progress made in the focus area approach. The progress during the quarter is shown in red. In Immuno-Oncology primary focus, ASP2074 is scheduled to interface materials in January and March for the Bispecificimmune cell engager. The details of the target molecule are not disclosed at this time, but will be disclosed at an appropriate time in the future. This is the second project to inter-clinical trials in the focus area approaches in the Bispecific antibody and we intend to continue to create subsequent projects based on the concept of the focus area approach.
In cell therapy program, the screening of ASP7317 clinical study was restarted in August. In ASP0367 our mitochondrial primary focus, additional screening activity was discontinued in the Phase 1b study in DMD. The reason for this decision was not that safety issues were observed, but that it was more difficult than expected to enroll patients in the study and to obtain sufficient data for analysis, even if the study continued as it is. We will consider the future development strategy in DMD after analyzing the available data. We are going to let you know, about the things will happen afterwards.
ASP8731 received orphan drug designation from the FDA for the treatment of sicklecell disease in September. In addition, we have selected targeted pertinent degradation, which had been a primary focus candidate. As a fifth primary focus, the details will be explained in the following slides on page 14 afterwards.
Targets that are difficult to approach with ordinary compounds are called as undruggable targets. In this primary focus we approach undrugable targets by utilizing the ubiquitinated proteins system and intrinsic Proteolytic mechanism as an approach.
As you see on the right picture, the new modality consisting of three moieties, one that binds to the target protein and one that induces degradation and a linker that bridges them together was created to establish a series of technology platform. We believe now we can continuously generate promising assets from the technology platform and we will proactively invest the resources to the primary focus to continuously create programs in oncology and extend it into non-oncology field as our primary focus.
Next, I’ll talk about the advantages of this technology. The first characteristic is that it can be applied for wider target. It has a stronger binding to the target for the direct inhibition. That is not what this mechanism has. It is serving as the catalyst to promote the degradation of the target, therefore it does not require high binding affinity like conventional modalities and is expected to be effective against Targeted Proteins that now have a structure suitable for compound bindings such as share-all pockets.
Second, because of its fiscal properties as a low molecular weight, it can be administered systemically, including orally and conventional established methods and the knowledge can be applied to its manufacturing process and regulatory compliance matters.
Next, I will explain the applicability and expandability of this technology. On the right picture, the left part of the figure binds to the target protein and by replacing this part, the technology can be applied to a wide variety of targets. The right side binds to E3 ligase and is involved in inducing degradation by modifying this site or the structure of the linker, we aim to enhance the efficacy and tissue specificity of degradation.
We believe that this new modality could be an innovative therapeutic tool and we aim to create a new program continuously to address previously undruggable target proteins by converting targets or further improving function.
Page 15, here I will explain the details of ASP3082, the lead program for the target of protein degradation as a supplement to the previous financial results presentation. As shown in the figure, on the right ASP3082 has the mechanism to bring the target protein KRAS G12D mutant and E3 ligase into close proximity and the E3 ligase Ubiquitinates the KRAS G12D mutant.
The Ubiquitination of the KRAS G12D mutant makes it more easily recognized by Proteasome, which are enzymes that selectively degraded proteins and Proteasome degradated at KRAS G12D mutant, thus by degradating KRAS a major factor in cancer cell proliferation it is expected to have an inhibitory effect on cancer cells.
The KRAS mutation, the target of ASP3082 is widely known to be involved in cancer development, but because of the lack of suitable pockets and sites for compound binding, it is regarded as an undruggable target, making it difficult to develop inhibitors. Among the many mutations, the G12D mutations occurs most frequently and occurs reportedly in more than 51,000 new cancer cases per year in the United States.
A small molecule inhibitor for the G12C mutant, another type of mutation is already on the market. G12C mutation has highly reactive sites called cysteine residues and with a tight binding to decide, it is believed to inhibit KRAS function. On the other hand, in the case of G12D mutant, which does not have such a site, it is believed to be difficult to create compounds that bind tightly here. ASP3082 is expected to be an innovative therapeutic approach to inhibit the function of KRAS G12D mutants as a protein degrader.
In order to further deepen your understanding of this primary focus, we are planning to hold an R&D meeting on December 9, where our representative will provide a comprehensive explanation. We look forward to your participation.
Page 16. I would like to explain strategic investment with TAYSHA announced the other day. Under the terms of the agreement, Astellas will invest a total of $50 million to acquire 15% of the outstanding common stock of TAYSHA, one board of service seat on the TAYSHA’s Board of Directors and exclusive option to obtain exclusive license for two of TAYSHA’s programs, as well as certain rights related to any potential change of control of TAYSHA.
TAYSHA possesses multiple gene therapy programs in CNS. It uses AAV9, a clinically proven vector. Intrathecally administration is adopted as a route of administration to improve the balance between efficacy and systemic exposure. This investment gives us the potential to expand our pipeline in CNS genetic diseases, in addition to our existing muscle related diseases.
In addition, Astellas’ new manufacturing facility in Sanford, North Carolina is capable of manufacturing AAV9. This service manufacturing technology is a major factor that led us to this mutually complementary partnership with Taysha’s promising pipeline. On the right side of the slide I will describe the two programs that are the subject of this exclusive licenses.
TSHA-102 targets Rett syndrome, which is a severe genetic neurodevelopmental disorder happening mostly in the females and it replaces mutated MECP2 gene. Currently it is on the stage of Phase 1, 2 clinical trials with a preliminary clinical data from adult study expected in the first half of 2023. The timing for exercising the option will be after receipt of the preliminary clinical data from the pediatric study, which will be initiated following the report of preliminary adult data.
TSHA-120 targets GAN or Giant axonal neuropathy, which is an ultra-rare progressive neurodegenerative disease and it is designed to replace the mutated gigaxoningene. Currently Phase 2 have been completed and a positivity have been obtained in terms of motor function improvement and safety.
A Type B meeting with the FDA based under study will be held in December of this year and the minutes of the meeting are scheduled to be received in January 2023, based on which we will consider exercising our option rights, while will continue to actively consider buttoning [ph] by leveraging our capabilities to accelerate the development of gene therapy and expand the pipeline.
Page 17, this summarizes the progress made in the first half of the current fiscal year toward achieving Phase b 2021. In XTANDI, left above, sales in the USA is below full year forecast or initial focus, but were offset by strong sales in Europe and Japan and progress was in line with the initial focus. PADCEV showed a better than expected growth globally and sBLA was submitted for the first line metastatic urothelial cancer, an important growth driver for us.
For fezolinetant, we achieved an important milestone with the acceptance of regulatory submissions in the US and in Europe. In the focus area project, left bottom, in addition to the development of individual projects, activities to further expand the pipeline such as the launch of new primary focus and the strategic investment progressed.
In terms of Core Op, right upper, we continue to thoroughly review costs while securing proactive investments for new product launches, and SG&A expenses excluding the impact of exchange rate fluctuations decreased year-on-year.
In our express program which was now discussed today, we have initiated a Phase 2 study of ASP5354 for lymph node mapping, prior to cancer reception surgery, with the aim of expanding the indication. In terms of sustainability, we have released the integrated report 2022. The report presents in an easy to understand manner our medium to long term goals, the way it would like to be, as well as our initiatives and progress for other goals. If you have not yet read that report, please take a look at it and feel free to contact our IR Group with your comments and your requests, so that we can make improvements in the coming fiscal year and beyond.
Page 18, this is the last slide for today. Here is a schedule of upcoming events. The R&D meeting will be held on December 9th as they mentioned. Sustainability meeting will be held on February 17th. I hope you will join us.
That is all I have to say here today. Thank you so much for your attention.
That’s all about our presentation. Next we’d like to entertain your questions. You can ask questions only through Zoom webinar. You cannot ask questions through live streaming. If you have a question, at the bottom of the Zoom screen there is a ‘Raise Hand’ button, so please press it. If you’re joining from the smartphone, if you tap the details, ‘Raise Hand’ will be shown, so please press that button. The MC will name you. So please unmute yourself on your zoom screen and please mention your name and affiliation and then ask questions, please.
Thank you for waiting. First, Citigroup Securities, Mr. Yamaguchi please.
Mr. Yamaguchi from Citigroup Securities, you may be your mute. So please unmute yourself.
Can you hear me now?
Yes, we can now hear you.
Sorry, Yamaguchi speaking. Thank you. Can you hear me now? Yes, I have two brief questions first. The foreign exchange rate changes. Q1 results, last year’s figures have not been changed. In the second quarter you are making a revision. No changes in Q1, but you are eliminating the impact of the ForEx impact on Q1 and Q2 and you are eliminating all this impact in the second quarter all at once, correct?
Kikuoka, would you like to respond?
If you look at page 21 in the presentation material, as I showed here, with an auditing firm and CPA we discussed. This does not constitute the change in the accounting policy. So as you said, we didn’t restate our historical statements, not really all at once. But in the second quarter in the account settlement for April to September period, we decided to introduce the system. So the first quarter numbers have not been changed.
What is the meaning of this table?
A – Kenji Yasukawa
In 2021 fiscal year or we can go back if we want, but the impact was not so big in some years.
So if we were to follow this method and from the first quarter of last fiscal year, what would be the cooperating profit?
The red portions are explaining that question.
What is the difference compared to the numbers announced already?
A – Kenji Yasukawa
That is shown on this page. As you see here in the second quarter in the current fiscal, from the six months account settlement, if you deduct the first quarter from the April or September period, that is the figure. Up to the first quarter, the yen continued to depreciate. So ¥4.5 billion for the fourth quarter as we said before; ¥12.8 billion as we announced.
¥12.8 billion figure is included in the first quarter. Because you are deducting that figure, the second quarter figure is plus or minus zero. ¥77.3 billion minus ¥12.8 billion yen, that figure is the appropriate number. Sorry, rather than ¥77.3 billion, the higher figure, and by deducting the figure for the first quarter, if you look at the second quarter figure just perfectly ¥77.3 billion is the correct figure for the second quarter. Do you have a clear understanding?
Next question, [Inaudible].
Today, you introduced us key success factors country-wise. The situation was well understood. So as in community, while the level of the success in the United States, that is going to be one important key factor to consider the success of this product, but next fiscal year, while the approval is going to be this February and after that you are ready to go.
Next fiscal term should be asked in the next fiscal term, but sales wise this will contribute.
Well, you will make an investment, but the sales will be increased. I think that’s your forecast for the preparation. Is this understanding right? And also considering the western countries, I just wonder if the penetration rate will be higher in the United States compared to Europe.
A – Kenji Yasukawa
Thank you for the question. Around the end of the fiscal year, the detailed number is planned to be explained and still it’s under the review, therefore the pricing forecast is something we rather refrain ourselves from explaining. And the target in the United States next year is about mid of three digits, hundreds of millions, and therefore I would like to rather refrain talking about the further details.
Is the three digit million of the end of the middle, it’s around $50 billion. That’s between 100 to 1000, right?
A – Kenji Yasukawa
Yes, that’s right. Thank you. Thank you very much.
Thank you very much. Next Mr. Koutani from Nomura Securities, please.
Kohtani from Nomura Securities, can you hear me?
A – Kenji Yasukawa
I have three questions. First, a very simple question. Continuously extended patient assistance program and the Zytiga generic product leader is your competitor in the third quarter. It’s growing in the United States. So it seems that competitive products are taking market share away from you. Is that correct? And the diagnosis rate of the prostate cancer is declining. Is that rising now? If nothing has changed at this, according to the forecast extended, the United States may not grow so much. There’s another study, it will be coming to an end, but other than that, it may not grow as is.
We don’t have Matsui today, so Zeiher would like to respond.
Zytiga, we are behind Zytiga in terms of the market share. Because of the rapid inflation and economic slowdown or recession, not all patients are economically rich, so cheaper Zytiga generics maybe the drugs they want and some patients or more patients are using PAP according to assumptions. So this tendency will continue given the current economic conditions. This tendency is expected to continue in our view.
On the other hand competition against the new products, we are not behind according to analysis. Patients who are newly diagnosed, we are looking at various statistics. It’s likely increasing as a trend, but it’s not returned to a pre-COVID-19 levels yet. That’s the understanding based on the statistics.
COVID-19 is coming to an end and now there is almost no impact of the pandemic, but in the past two and a half years patients were under diagnosed. Risk factors overlap between COVID-19 and prostate cancer and we cannot calculate the numbers. Some patients unfortunately might have passed away by now. Those who are still alive in the COVID-19, it does not mean that they would not develop prostate cancer, and because of the under diagnosis they would progress and they would come back to the market.
Regarding this return of the patients, how salespeople will approach these patients to gain the business, that’s going to be the key. As I said during the presentation, already in the United States close to ten years have passed since the launch in the United States considering the situation in the U.S. society. Untapped market does not remain much. For the past two and a half years there has been underdiagnosed patients and that may be an untapped market for us.
Thank you, the second question. This might be the difficult question, but this is extremely important. That is the impact of IRA. The catastrophic phase, the increase of the medical prices, I think that is important. 2025 and afterwards there is a cap of the price and extended, I don’t know. Suppose it costs about 100,000 before and after IRA, they increase. Per patient becomes 1.7 to 70 and there is an increase of the payer and also there is less PIP necessity, nor increase of price.
The price also reduced paid by the patient, but the step edit and the prior authorization that leads to unavailability of extending. In order to prevent that, the rebate has to be increased. If so for 2025, greater level of the rebate is expected. Therefore the 2026, FY 2026, there might be the decrease of the revenue of PADCEV [inaudible]. All of these products are likely to be impacted with the IRA. So with this perspective, how do you see the current situation?
A – Kenji Yasukawa
Yes kava [ph], myself is going to answer this as well. Extending Myrbetriq is likely to be the target of the press negotiation, that’s what we think. And extending in the first year or FY 2026 becomes the target of the person negotiation. Then based upon the current rule, the price is possible to be reduced by around 35%.
But the appreciation criteria is under the development currently, so in reality how much it’ll be we cannot predict. So this is just based upon our imagination. LOE is 2027, so we do not think that would be the long term impact, but when accurate the calculation result becomes available, then I would like to let you know.
Regarding Mirabegron, when Part-D re-deciding is done, then the upper limit of the out of pocket payment by patient becomes $2,000 per year, and currently those who are using the very expensive drugs and those who with no cap for the other pocket, there will be the great reduction of the burden.
And in the case of the redesigning of Part-D, then payment exceeds more than $2,000. Then payment is going to be increased, therefore they might incur it with the financial burden. So payer might have the strict control of the cost and prioritize the generic, so there are several factors. In the background, we haven’t done the accurate calculation yet as well, but Medicare currently the sales prediction of Mirabegron is 65% currently.
What about this extended 25 and afterwards you expect the growth concerning the constraint phase. The rebate has to be increased greatly?
A – Kenji Yasukawa
So FY25 and afterwards, it is better that you would say there will be no growth expected. While that has been explained, the new indication is going to be submitted and if that is approved, then we have a room for the increase of the sales.
But excluding that, then as we mentioned 2.5 years portion of under diagnosis, if even that is excluded in the United States, we don’t see much of the untapped market remains. So the gross room in the United States is quite limited. If the price is reduced there, it is definitely happening that that sales in the United States would be decreased even before the [inaudible].
Next off, it’s only – I thought as you say to a certain extent penetration will be quite fast, because globally 10% of the patients are not indicated for hormonal therapy. So there can be early indication among those patients, but if it’s just 10%, it’s just around ¥200 billion in the remaining 50% of the patience.
They have to be careful about a hormonal therapy PBMI, 33 or all higher or hypertension or dyslipidemia or diabetes. What do you think that the ramp up in these patients? Are you expecting an increase in one step or two steps? You go into the initial patient population and then gradually it’s going to expand. Is that the image you have? This is my last question.
A – Kenji Yasukawa
Today Matsui is absent. I don’t know further details about marketing strategies, so when Matsui is attending we’d like to explain further details.
Understood. Okay, thank you very much.
Next, Credit Suisse, Mr. Sakai please.
Credit Suisse Securities Sakai speaking. First question, so with zolbetuximab, the commercial inventory production will be increased. Therefore, are you increasing R&D cost for this as well? What is going to start this? There is what we – we are waiting long time for this matter, but if there’s a focus, I would like to know your outlook. That’s the first question.
Second question, that is about the products. That’s about Fezolinetant, have you open advisory committee or not, that’s what I want to know? The notification will be probably two months or three months before the actual date, but what kind of communication are you having with FDA or no communication?
A – Kenji Yasukawa
The first point let me answer it for the first question and Taniguchi is going to talk about the second. The first question, that’s about the zolbetuximab. As you know the two Phase III studies are ongoing. If you refer to slide eleven, soon the result is going to be available.
For example, Fezolinetant administration, four weeks administration. That is not the case for zolbetuximab. This is event driven city. So the accumulation of the event is key, so we cannot predict or pinpoint the data of the top line result. That’s why we have these bars from the late third quarter of this fiscal year to the mid of the next year fourth quarter.
So some point around this time we believe that we can communicate to you the result, that’s the response to the first question. The second question, that is going to be answered by Taniguchi.
Thank you. There is a question about the submission status of the facility in the U.S. With the U.S. FDA day-to-day basis we have the very close communication. The submitted data is very clear, so the data itself is what we have great confidence. So currently U.S. FDA advisory committee is not expected to be held. So far things are ongoing in a smooth manner and after submission, the discussion is going without any problems. Thank you very much.
Thank you. One more additional question. Taysha, your investment with Taysha, within this AT132 is still pending. Under these circumstances, adeno-virus and Taysha has AAV9. There is some difference there in the use of different AAV, but in this area your initiatives and your activities in this field. If one is going to be successful, are you going to have consecutive successes one after another? You may have such a way of thinking.
How should we interpret this? Adeno-virus and vectors are used for gene therapies. Your incentives in gene therapies is very difficult and you are making additional investments into Taysha. There can be some associated risks you have considered by now. So from where you have decided to make strategic investments in Taysha, including your experiences with Audentes. Could you explain please?
A – Kenji Yasukawa
Okay, Yoshitsugu Shitaka would like to respond first. It’s the same AAV, but systemic administration into the blood and local administration are different things. Ophthalmology and Taysha is using local demonstration, intro seiko administration, it’s not the systemic administration, so liver side effects would be a lower risk.
In that sense, those in the clinical stage, there are two programs for us and they are using – we are using systemic administrations. What’s different from that is local administration. So continuously it’s the same AAVs, but there is a slightly different risk philosophy in here. From that perspective we wanted to – decided to advance Taysha’s programs.
Kikuoka would like to add.
As you know biotech shares, of course we took that into account because of the situation of biotech shares and we decided to secure the rights to these two programs. We would like to minimize the risks in doing this in our investment. So please take that into consideration as well.
In principle, in being optimistic we’d like to leverage these opportunities flexibly and that’s why we are doing this. For a listed company, investment in a listed company to secure the development rights, in a unique way we had this transaction.
Understood. In the R&D meeting on the 9th of December you’re going to focus on gene therapies to present, correct?
In the R&D meeting, we are going to discuss the targeted protein degradation on the 9th of December.
Thank you very much.
Thank you. Morgan Stanley MUFG Securities, Mr. Muraoka please.
Good afternoon. Morgan Stanley, Muraoka is my name. Thank you. I haven’t really read through the material, so my question might not be really pinpointed, but generics of Lexiscan. Lexiscan number [inaudible]. There is no change about their budget, but generic is already on the market or not and also the pre-conditioner of this budgeting this time, what is it? And the budgeting up until last time, I think that is in others, but what about the designing this time, would you please explain about that?
First of all, let me explain. Well, let me explain about the history of litigation from this May and after that Kikuoka is going to explain you about the condition of the budget team.
First of all in May, the patent infringement litigation. With our first instance our appeal was not approved, so we lost the case. Then in June, the court of appeals for the federal circuit or CAFC, toward that we appealed the case. And on top of that, to the district court which made the first instance we appealed for preliminary injection, but that was rejected.
On the other hand, for the district court in 2022 up until the 5th of October, the preliminary junction order for the generic launch was given or granted, and the September 27th CLFC issued the temporary stay that refrained themselves for the launching, the generics risk temporarily to Hospira.
Then October 28, only recently, CAFC entered an order extending a temporary stay through December 6, 2022. That’s what’s happened recently. Of course the – our situation is still ongoing, but by December 6th there will be no launch of the generics.
And December 7th and afterwards, what would happen?
Well the, this company might launch generics at-risk. Hospira might launch the generics at-risk, that’s the current situation.
A – Minoru Kikuoka
Regarding the budget, let me explain about it. Kikuoka speaking. As has been mentioned, when we budget for this fiscal year like you mentioned, we didn’t change the focus of the sales. In the risk and opportunity within the overall sales or the revenue, we took this factor into consideration. But just like the Yasukawa explained, our assumption in the beginnings. Of course the result of this litigation is something that we have to wait, but compared to what we expected in the very beginning, this might be eased to a certain extent. So compared to the past, the impact onto this fiscal year is smaller than the previous.
I see. So you reduced the portion that was personally included in the others, is that right?
Yes, that’s about it.
Understood. Thank you very much.
One more question. [Inaudible] Sorry to ask a question again. Next fiscal year you’re expecting sales between ¥10 billion to ¥100 billion. Profit contribution, we don’t think there is going to be a contribution in the initial year. But it contributed to profit in the second year or the third year and beyond what should be the image we should have?
Kikuoka, would you like to respond.
A – Minoru Kikuoka
As Yasukawa explained, as for the timing, it’s difficult to communicate the details of the marketing strategy, but as for the numerical image, on the sales side we are discussing right now, from that perspective that is going to be the basis. Then from the first year contribution to profit is Insight in developing the budget for the next fiscal year.
So is it going to be work positively for the profit from the initial year, is that within your scope or Insight?
A – Minoru Kikuoka
Yes, expenses in the next fiscal year, near background costs are being reduced for legacy product. But at the same time, in the first year it’s going to contribute to profit positively with Debron [ph] and other products and these are legacy products and we will try to reduce the cost for those products.
But for our brand we have PL for each brand we are looking at. From that perspective, in the current fiscal year, the expense – compared to the expenses used for education activities based on the expected launch, sales promotion costs will increase. Even with that profit contribution by an individual product it could be a possibility, so we are discussing based on that.
Understood. Sorry to ask again, but partnering is Insight. That’s why you are thinking that there’s going to be a contribution from the initial year, no?
A – Minoru Kikuoka
No, that’s not our assumption.
Okay, understood. Thank you very much. That’s all for me.
Thank you. Next Daiwa Securities, Mr. Hashiguchi please.
Hashiguchi speaking, thank you very much. Fezolinetant, you have that forecast and based upon that. Next fiscal year R&D in total, what’s your outlook?
In these five years CSP, RSA, ANG [ph] we see it as a flat. Absolute value is maintained in your plan and the previous fiscal year, there’s a bit of the increase, but this time excluding the foreign currency impact you are trying to bring it back to the two fiscal years before level. But you explain us the focus of the sales, considering that for me it’s a long time.
You can spend a lot of R&D and still that is reasonable from a strategic perspective. So what do you think about the possibility of that inflate a little bit tentatively?
That’s about the next fiscal year. So we are still working on that currently. Basically Fezolinetant, concerning that is going to be approved within this fiscal year, the big marked like development is completed. So considering the allocation of the investment for the strategic products, so far we are not expecting that large amount of investment will be made as R&D.
Hashiguchi, you are asking the SG&A or R&D?
A – Kenji Yasukawa
Oh, so sorry! It’s about SG&A, I misunderstood. As for SG&A, the strategy is similar with this fiscal year and also for the products that you mentioned. As it’s been mentioned already, we are going to make a proactive investment. However, even that taken into consideration, the factors of the currency. That is something we have to consider based upon the initial assumption. We do not think that that will be the bigger impact out of that.
But November and afterwards we are going to work harder for the budgeting for next fiscal year. We need to communicate with our sales team as well, so that we can have a discussion for another opportunity of the revenues. If we can grow in certain areas, then I will make certain investments. Here I cannot tell you any detailed number.
But anyhow, there is no change about the policy of continuing the SG&A flattened level as now. Sorry I misunderstood about R&D.
I see. It’s okay. But for SG&A for five years, well so far there is no change about flattening it, right.
A – Kenji Yasukawa
That is the current policy, and as has been explained repeatedly, we’ve done the proactive investment. We have to get the result out of that. So now what we can do is the selection and consideration. So we concentrate investment, so that we can be efficient.
Thank you. That’s all.
Thank you very much. Next, Goldman Sachs Securities, Mr. Ueda please.
Ueda from Goldman Sachs Security. Initially I’d like to ask you about PADCEF. In the United States, if you look at the quarterly figures, the second quarter figures look weak. But as Dr. Yasukawa mentioned, because of the coverage already for the second round already, if there is any information about the inventory? Could you explain the first way to get a disclosure and any assessment in the clinical settings on any change in how they use the drug?
In the United States it’s 105 million. Before we showed you a long term diagram, first line treatment and non-invasive will be what this does for the future. Then we’d have the second rocket to be launched. Recently at academic societies we are disclosing the data. What has been the reaction, Taniguchi any information you may have?
Thank you. As you know, at ESMO where our three study Cohort K was presented, there was a very good response there, cisplatin ineligible tolerant. You see patients ORR was 64.5%, which was very high response, so there are high expectations about this data. With this we would use this data to file our submission. First in the United States we did file the submissions. In our discussions with doctors there are higher expectations about this drug among the physicians.
Understood. Thank you very much. Second question, that’s about Fezolinetant and line extension, expansion of the indication pile.
A – Kenji Yasukawa
Yes, cohort flash is working for the expansion of the indication for cohort flash for the breast cancer patients. So Astellas says well, are you thinking about the expansion of the indication beyond the VMS or hot flash.
This 13 receptor inhibitor, that’s one thing Fezolinetant: NK3 receptor inhibition. So when you think about this, two types of the inhibition. What will be the difference? The first question, Yasukawa, could you answer the first question?
Thank you. The breast cancer indication is probably a question, of course as well. Have – we also have a knowledge about the development situation at other companies. So as well – could you mute your microphone?
Regarding the second question, what would be the difference when one thing is another. One thing different is tapped on, what kind of difference would have happened so far, we don’t have any data and information, so I would rather not answer.
Understood. Thank you very much. That’s all.
The first question by Mr. Ueda, we don’t have Matsui here, so I would like to add. First quarter and second quarter difference for PADCEV. First quarter, temporary clinical order sales for 10 million was included in the first quarter. If you deduct this, from the first quarter to the second quarter, you can see good growth. So that’s something I wanted to add on behalf of the IR team. Thank you very much.
JPMorgan, Mr. Wakao, please.
Wakao, from JPMorgan. Thank you very much. First, expand it. Explain the details, sorry to ask again. In the United States, those who are not diagnosed may contribute positively. On the other hand, if you look at the number prescriptions, Zytiga generics are growing, XTANDI growth is slowing or becoming flat. Considering the situation, the nerve diagnosis may increase, but XTANDI may not necessarily benefit from that as I felt. So could you elaborate on this?
In the United States you really explain the situation, but what about Europe? A similar thing must be included in your assumptions for Europe, like the U.S. Zytiga generics already launched in the European regions as well. So what is the impact? That’s my first question.
Patients with under-diagnosis, we don’t know and we cannot investigate the details of the economic conditions of the underdiagnosed patients. Patients who are not economically in good conditions may be diagnosed. When their disease is already progressing, it might be discovered at the time they may go to cheaper generics, there is such a possibility. So patients who would return may not necessarily receive the prescription for XTANDI, but still we’d like to continue appropriate educational activities then for patients who would just fit for XTANDI prescription. We would like to deliver the prescription and the drug to them.
There is appropriate activities and the diagnosis is continuing the United States and economic conditions right now would intensify the competition against generics right now. Similar signs, not only in Europe, but in other regions globally. For the – in the quarterly meeting I asked this question to sales people at such a meeting. There are no clear signs according to their reply. For the time being we don’t have clear science, but continuously we’d like to pay attention and watch it carefully.
Thank you very much. Second, the last question is on FEZOLINETANT. The other day in the meeting I got a very good understanding and I understand status of the potential patients. But also a draft version is currently available, and if I refer to that regarding the safety, with the long term usage there might be the risk of regarding safety, especially for those over 60 years old, the risk might go up.
So the risk, just that you explained is now covered by the asset version. So I feel a bit of the gap existing here. How do you view? Well, it’s ISA, so that’s about for the reduction of the cost, therefore their way of the description might be quite conservative, but what’s your opinion about just a ISA drop version.
I am Shitaka speaking. Regarding ISA, well that is independent and reported by themselves, so we don’t have any clear stance or position for their view. So we couldn’t answer you some clear answer.
I see. So you do your own analysis in the study, right?
So for the safety we have a SKYLIGHT 4, result is available, with a comparison to placebo and the safety requested by the authority is secure to a certain extent or great extent. So that is our position.
Thank you very much, that’s all.
Next, Jefferies Securities, Mr. Barker please. You may be on mute, please unmute yourself.
Stephen Barker from Jefferies Securities. Thank you very much. Fezolinetant, sales in the initial year is my question. As you said, ¥10 billion – somewhere between ¥10 billion to ¥100 billion could be achieved, but could you be more specific regarding this number?
Thank you for your question. What I mentioned earlier is three digit, the middle of the three digit of yen. It’s not like you can do away with, ¥10 billion or ¥99 billion, but somewhere in the middle in that range.
Okay, thank you very much. That’s all from me.
Thank you. From the media we have received a question. Nika BioTech, Ms. Kubota please.
Can you hear me? Yes. Two questions about gene therapy that you touched upon at the very end. In your explanation AAV can be also produced in your new production site in the U.S.
So TAYSHA, well this is a production capability of GMP production of AAV. It’s something looked for by the TAYSHA and you have it. That’s why you came to this investment or your production capacity might be also made use of through this investment as well. Thank you for the question.
TAYSHA, well our GMP production sites in Stanford, that is where also the TAYSHA is having the great interest, that’s why – that’s one of the reason why we are selected. So the investigational product and also the production sizes, those what the TAYSHA do not have, does not have, probably they are outsourcing for such process. However, for the commercial production, if that approach will be continued or the partnership with us, so that we ourselves can produce the products, I think that’s what currently they are thinking. Thank you.
One more question about this investment partnership. To control the over expression of the recurrence gene, they have the technology program. Is there any possibility of using this for your systemic recognition programs of Astellas. You’re talking about the TSHA-120 is using the MI rear platform to control the overexpression of the genes.
mACP A2 gene itself, you’d like to regain one, there are duplications of the gene. In other diseases it should not be two. So there should be a feedback mechanism to make it always one, such a mechanism is entailed. Similarly, if there is a need for a similar thing in the genetic diseases, a similar technology might be required.
Thank you very much. That’s all for me. Thank you.
Thank you very much.
Next will be the last question. Tokyo Tokai Research Center, [Inaudible] please can you hear me.
Thank you very much. First question, that’s about the business in China, Greater China sales. That is on the progress as much as 36% increase and that there is an increase in the plan as well. But the 80% is a pro-graph that is contributing to this increase. But as you know in China there’s issue of the COVID-19 and also their own program for the purchasing and there is the case that the only the rich people can get the benefit of the treatment. But overall how do you view the Chinese business?
Thank you. Yasukawa is going to explain first of all and Kikuoka will make a supplement comment if necessary. It’s been more than 30 years since we started business in China. For a longer time [inaudible] dependent business is what we’ve been doing there. But of course relying on only these two products will not make us to further expansion rather shrink, especially terms those – there is no futures of expansion program. It might be survived for a certain period of time, so that’s one thing.
But percent in the mid-2010 and afterwards the non-foreign companies for China, meaning us and to them they opened the door. That’s a big change of their policy and also their economy is enriched currently and also iPhone and such communication measures, although there is still certain restriction. But they can get the information about the treatment taking place in overseas.
So in western countries and Japan, our treatment available. That market is not available in the Chinese market. If that is run by the national public, that’s going to be the risk for the communist regime. So in China it’s now approved, but as long as it is a superior products, they are going to grant the approval immediately. That’s what we’ve been looking at the China, therefore we enhanced the development group in China. So just XOSPATA, XTANDI.
Well XTANDI we’ve been doing even before that though it took time, but XOSPATA and afterwards in the western adventure countries, they – we are trying to shorten the interval, so that we can launch the kind of products in Chinese market the soon.
So XOSPATA parts as well, we have the average study for China that made a success of zolbetuximab, that is for gastric cancer. Southeast Asian countries, I guess the cancer prevalation is really high. So we are aiming at the development even from the beginning in china. So Prograf such conventional drugs are going to be replaced, especially with the area of oncology.
Thank you. I understood very well. Thank you.
May I add? Regarding Prograf, you ask a question, so let me add. As you said Greater China is growing a little less than ¥6 billion. We have Prograf in China. At the end of 2021, due to COVID-19 Shanghai and the factory were shut down. The market inventory, it was depleting and because of the resumption the shipment increased. There was some special factor behind. Please take that into consideration as well.
Understood. My last question. Sorry to ask again, but Fezolinetant, on page 12 in USA and Europe the expression is slightly different in prescription to patients. Hot flash, there is an ethnic difference and also whether to see this as a disease or not, there may be some cultural differences in the market. My point is that in expanding this, there may be a lot of cost required for education activities in China. It was not so successful, but how do we – should I see this for the future in China?
Today we don’t have Matsui. Today in Europe the – how much patients are aware of this, we cannot give you a concrete explanation today. So we’d like to do this next time and to explain by Matsui or from Corporate Communications.
In China as you know, China, Korea and Taiwan we had a study there and endpoint set for the study were not met. In China, 30 milligram – we had a study up to 30 milligram in china. The 45 milligram is submitted in Europe and the United States only. So using the data from western countries we cannot fire our submissions using that data only. According to that judgment the team is now considering the next program. Once we have further discussions and are ready to announce the next plan, we’d like to explain the details to you.
Understood. Thank you very much.
Thank you very much. Time is up. So with this we’d like to close today’s explanatory meeting here. Thank you very much for your attendance today.
Thank you very much.