Website. If you have further questions, please reach out to our Morgan Stanley representatives. Let's get started the session with Takeda. The speakers are Andy Plump, head of R&D, and Rhonda Pacheco- Thank you. from U.S. business unit head. Thank you, Andy and Rhonda. Thank you for joining us today. Yeah. Thank you. Great to be here. Yeah. Thank you. Thank you. Before starting our session, I'd like to say great gratitude to Andy. According to the couple of days ago press release, you are retiring from the current role. You have contributed more than 15 years at Takeda, and now you have built a huge pipeline franchise. Thank you for your great achievement in the last more than 10 years, and I'm a bit sorry. A bit faith. I'm so sorry for that. Yeah. Well, thank you very much, Muraoka-san. We've had a long time together. Yeah. In all the quarterly earnings reports that we've been in together, you've asked me a lot of really hard questions. It's not the reason I'm retiring, but it's an upside to not have to take your hard questions anymore. No, but thank you. It's been a privilege to serve in this role for the last 12 years. I have never had anything professionally in my life that's been like this. It's an amazing company, very strong values, rooted in very strong science, and I'm very confident in our future with Julie, with Rhonda, with our team, with the pipeline that we have, and I know we'll talk about that. I'm around for the next eight to nine months. Yeah So I'm really looking forward to seeing you through a number of activities, and then managing an effective transition. Great. Thank you. Today, I will ask a lot to you about the pipeline. Hard questions. More hard questions. Okay. Thank you. Takeda has actually many pipelines. For me, as an analyst, for the first time in the last 10 years to discuss a lot of pipelines with Takeda. In the last 10 years, the opportunities of talking about pipelines were not so much, but now you are in a big inflection point. I would like to ask a lot about pipeline. Before that, Andy, you are retiring. Julie Kim, as CEO, she has taken over the big responsibilities from Christophe as well. It is a big changing phase for your companies. My question is capital market today to be set in December of this year. It is for her, big opportunities for explaining her new challenge going forward. My question is, what to be changed from the capital market today? What can we expect to the different directions of your company after the capital market today? Maybe Andy or Rhonda. Yeah, go for it. If I answered your question, then no one would want to come to our capital market. Yeah. What I will say is that it is December 11th. It will be in Tokyo, it will be an all-day event, and the focus will be really on rolling out the strategy under Julie Kim. As many of you may have seen from prior disclosures, we look at the future in two phases, Horizon one, Horizon two. Horizon one is about deep investments in the pipeline, about deep investments in these exciting launches, continued build of the pipeline, and for the most part, low overall growth. Horizon two will be a chance for us to really start to take off. The goal of the capital markets day will be to show where and how we are going to be focusing in the future. Anything to add? I think I am excited to hear what you said, too, is we have that pipeline now. It is in our hands. We got exciting launches. Horizon one, I am excited about because it is all about head down and execution. You will see that, and you will hear that a lot from Takeda these days. My simple question is, maybe the Horizon one plus Horizon two to be roughly the five-year timeline. Investors expect shorter Horizon one, and Horizon two should be longer and quite a meaningful leap from the current level. Could you guide us what timeline or what is the trajectory of the Horizon one, Horizon two? Could you dive into them a bit more detailed, please? Go ahead. Yeah. I don't think we've gone out there and said that we're expecting a five-year Horizon one before. I think our expectation is more rapid to get to growth, and the reasons for that we'll describe on December 11th. I think the big piece that's going to be happening for us is we just launched MIMRYLO last week. We'll launch ORZEYFUL in the U.S. later this year, and then as we announced today, we expect to launch zasocitinib in March of 2027. By mid-next year, we are going to have a lot of data from these launches that will inform on the trajectory of Horizon one to Horizon two. Great. We'll get into that respective promising pipelines. First, about orexin, or narcolepsy. ORZEYFUL, it was approved with clean label in the last month, August. We are waiting the DEA scheduling. What's the timeline of DEA scheduling, and what can we expect, which class to be designated? My image is Schedule IV, but could you guide us, your rationale going forward? Yeah. Sure. We got the approval from the FDA, as you said, in August 1st week. The DEA has 90 days for scheduling. It brings us in the November timeframe, and we're expecting a Schedule IV assigned. Yeah. Other orexin molecules, as was insomnia drugs, Schedule IV. I think it's quite rational for your product to be similar, of course opposite, but similar mode of action. Schedule IV sounds quite rational. Is that correct? Correct. Great. Another question is pricing. Of course, you cannot comment right now. I know that, but could you give me some more color or flavor? Sure. Yeah. Pricing will be competitive. I think what goes with pricing is access, and we want to get this new standard of care type medicine to as many patients as possible. I think our focus at launch is broad access, quality access, so physicians can write this and patients can get it. But our pricing will be very competitive in order to do that. I guess, the competitive is mostly the same or same as the oxybates or slightly premium price to the oxybates. My guess is it does not make sense. It does make sense? Does it make sense or not? Oh, yes. It does make sense what you're saying. Okay. Competitive means that. Great. Scheduling, pricing, and marketing strategy. Yeah. Some investors are still wondering whether your penetration is fast or not. Because the oxybates, it has many issues, but very well penetrated in the narcolepsy space. According to some KOLs, I am not sure. In opposite, you recently have said, you expect a quite fast penetration of ORZEYFUL after the launch. Could you guide us what you are expecting, trajectory or strategy for penetrating- Yeah or replacing or your strategy going forward? Yeah, I think you said it. Competition is well penetrated, but I also think there is a huge unmet need. When you talk to patients and physicians, there is a lot of polypharmacy, and 80% of patients that are treated today still have residual symptoms. Why is that? Because they are not treating the core of the disease, the underlying orexin that they are missing. There is a huge unmet need. Patients that are cycling, not getting to the full potential of being treated. That is where you see our strategy of really switches early on, because these patients just are in need for ORZEYFUL that is treating their underlying cause of the disease in NT1. So the switches will come on board across all different treatments that they are on today. Not only are we focused there, but we also have to focus on diagnosis rates. 50% is where the diagnosis rate is today. For that longer-term growth, that is, we need to increase that. At launch, it will be switches, a faster uptake like you are saying. Then to continue that in the longer term is really increasing diagnosis rates to get patients into the top of the funnel. Have you ever done some kind of market survey or a patient survey or physician survey for launching ORZEYFUL? Their preference of the new treatment. Do you have any such evidence? We do a lot of market research. We talk to a lot of healthcare professionals and patients. Even when we got the FDA approval, even social media, we meet this small group of patients that are just really, really excited about this online. Because again, they haven't had something that treats the underlying cause of their disease. The excitement is really around that. And we hear that healthcare professionals are ready. The sleep specialists are very excited, again, about something that treats the disease and not just the symptoms. It's very, very positive, and we want to keep that momentum. We just need the DEA scheduling to get going. We're excited. Okay. Anyway, according to your survey as well, the patients, professionals are expecting the fast replacement from the current treatment. Because the cycling and because, again, 80% get residual-type symptoms. They're wanting ORZEYFUL, they want that tool in their toolbox to give it to their patients that are in need, for sure. Add-on or combination use would not be the majority of the use of ORZEYFUL or with oxybates combination use. Look, I always say we studied in mono, it works in mono. That is where we will educate, that is where we will promote. It is totally up to a healthcare professional on whether they want to add that. But the switching is what we are going after. Great. Thank you. The other common questions on ORZEYFUL is it is twice daily. Of course, I think the twice daily would be quite good for that natural symptom of the patients, the level of orexin. I know that. But competitors are highlighting their drugs are once a day oral. A competitor is coming soon from behind. Actually, a big company recently acquired your followers as well. Could you guide me the once daily, twice daily, the discussions of which one to be better or which one should have some disadvantage or not? I would like to know that. Yeah. I'll go. Sure. We'll get to you. No, this is great. Oh. Look, I think it provides flexibility. I think ORZEYFUL, yes, it's BID. It's so much more than that, too, right? The efficacy you're seeing across this molecule, this drug is amazing, and it's so broad. I would like to start with that. BID provides flexibility. We studied that way purposely. You can talk about that. I take it in the morning. If I have something I want to go to that evening, I can delay that second dose so I can have dinner before I go to sleep, et cetera, or I am working late. Then maybe if I am having trouble sleeping some nights, I take it earlier. There is flexibility in that. Let us see where the competition ends up, but today what we have is a very efficacious drug that is BID, and we have numerous molecules coming that can also compete. I say ORZEYFUL is just the beginning. ORZEYFUL is just the beginning. My next question is about TAK-360. Yeah. NT for NT2. The most common question is when can we see the phase II readouts, the results? I will take that one. Yeah, go ahead. Yeah. We have two molecules that are behind ORZEYFUL that are in the clinic right now. You just mentioned balumorexton, TAK-360, that is in phase II for IH and NT2, and then we have TAK-495, which is just completing phase I. We have a third molecule that you will see entering into our pipeline in the clinic in the next couple of months. Then we have a very rich activity in those labs, a discovery activity with new molecules. They are not tweaks. We are trying to make molecules that are very different pharmacological parameters that we think will play in different indications. We will talk more about those later. To your question, 360 phase II data will be later this year. Later this year. Later this year, then we are going to be accelerating 495 as well. We hope to have data for 495 next year. A bit more color of the timing. Your second quarter earnings is the end of October, and your capital market today is December 11. Which one can we see? Okay. I will answer part of your question, which is we will not have data to share in October. Whether we have data to share at the Capital Markets Day, I think is going to be a function of what we see in those data sets. We are very excited about it, and also the competitive landscape. We worked very closely, actually, this week. Emmanuel Mignot and Yanagisawa, who are the academic fathers of this space, are being awarded the Lasker Prize here in New York. It is very exciting. I say that because we have had a great relationship with the scientific and clinical community. It is a really close connection, and we have really been thoughtful as to how we release data in line with the needs of Takeda as well as the needs of our partners. Whether or not we disclose in December or decide to wait till scientific congress will be something we will decide as we get closer. Yeah. Scientific congress. Yeah. Okay. Got it. In terms of TAK-360, of course NT2 result is quite important for capital market. But there are some discussions about the NT2, whether your orexin compounds to be effective, whether effective enough to NT2 population. NT1, it is clear. Could you give us some rationale of why you are excited about NT2? Sure. But maybe if I dial it back up and just talk about the nature of these diseases. Because for those of you who are close to this space, there are probably dozens of potential indications that one can imagine treating with an orexin agonist. I would bucket these diseases into two categories, NT1 and everything else. NT1 is a clear pathophysiology. This is a loss of orexin-producing neurons in the brain. You give a molecule like ORZEYFUL, which is an orexin agonist back. It is almost like a neurotransmitter replacement therapy. For all of these other conditions, we have a much more mundane understanding of the pathophysiology because there is normal orexin levels. It is a defect in orexin signaling somewhere. All of those indications are going to require very different development programs, very different dosing, very different scheduling, and that is something that we are working towards. NT2 is an example of that. What the dose level will be, it is likely to be higher. What will be the efficacy profile? Is it going to be curative like we see with NT1? What is the durability of effect? Those are all questions that we have remained to answer. I think we feel very confident based on the data that we have seen from competitors and based on our own data that we have seen with prior molecules. Yeah. Of course, we need to wait for the results, but I think the best expected profile of TAK-360 for NT2 is maybe once daily for NT2 indications. Are my assumptions quite pretty fair, or even with NT2 twice daily to be acceptable, what now? Well, I think, again, if I always go back to the science and translating the science, if in any of these conditions where you are trying to normalize sleep-wake cycle, you want to match normal physiology. Normal physiology is you wake up in the morning, your orexin levels start to rise. You have a good night's sleep. Over the course of the day, you are getting more and more tired. To combat that tired, your brain makes more and more orexin. It goes higher and higher. That keeps you awake, and then you go to bed, and it goes down again. In principle, for any of these diseases in sleep-wake, you want to try to mimic that natural pattern with an oral molecule. Doing that with a once daily dose, that is a very difficult PK profile to match, firstly. Secondly, everybody is going to have their individual differences. As Rhonda was saying, having that flexibility to dose twice a day, we think is critical in the vast majority of patients. I would expect, as with NT1, that for NT2, you're going to be better off with the twice-a-day dosing paradigm. Oh, so flexibility is quite important. Yeah. Oh. Got it. In terms of 360, sorry, I'm asking too much about 360 but- He's excited about it. Yeah. You recently have started the NT1 population study. What is the rationale? You already got the approval for ORZEYFUL. Yeah. Why? Well, first and foremost, we think ORZEYFUL is not just a first-in-class but has every potential to be a best-in-class drug. We are actually running a study that we do not talk too much about in Europe right now, a phase III study. It is called a randomized withdrawal study. It will be necessary to support registration in Europe. There is an element of that study that we are adding, which is a slightly higher dose, and this is for ORZEYFUL. So we think between what we have right now and the potential to dose a little bit higher, particularly with that second dose, with the flexibility, ORZEYFUL will meet the needs of NT1 patients. That is what we think. We are being careful. We want to make sure that we are exhausting all possibilities. We are running a very small NT1 study in TAK-360, just in case, keep our options open at this point. Got it. It is a bit too early to discuss about the pricing to NT2, but NT2, can we assume mostly the same pricing, same annual cost to NT2 population with NT1? I do not think so, but also, if you have any more color on the pricing dynamics. I love answering pricing on phase IIs. Look, it could probably be different, where the market is, where the competition is, what the data looks like. All of those factors go into pricing. I think it is still too early to tell, but yes. Could it be different? Yes. Mm-hmm. Okay. Got it. Moving to zasocitinib oral TYK2. Congratulations for that being accepted by the FDA for your filing. Just the confirmation, the PDUFA date is March 13, right? Yeah. Okay. Yeah. In mid-March. You can launch it within your fiscal year ends in March, so within the current ongoing fiscal year. Correct. Of course, the pricing is you cannot talk. I know that. ICLUSIG is already on the market, and they are penetrating quite well. So maybe competitive pricing. Yeah. Can we expect like that? Yep. You know the pricing of ICLUSIG. We know that access is critical for this launch, too, like every launch, but this one even more. In order to gain access, we will be competitively priced in order to do that. Yeah. I remember that your psoriasis phase III data was quite clean. Both in efficacy and safety as well. In the past, some investors showed some concern of the TYK2 is some similarity to JAK inhibitors in terms of the mode of actions. But the safety profile was quite different, I understand. But there are still some discussions with investors that psoriasis future to-be approved label may some restrictions of the use or some safety warning like that. What can we fairly expect your safety profile or safety profile in the label going forward? Of course, it is too early, but what is the rationale going forward? Yeah. Maybe I will take it first, and then I will let you talk about Sure maybe the label and how highly selective we are. You said it, I just want to reinforce. This is a great efficacy story. I think, too, even if we were talking six months ago, it would be different. We have now turned over so many data cards with this molecule, and it just keeps getting better. You are right. When we talk to HCPs, when you talk to people out there, they want a drug that works, they want a drug that works fast, and that it continues to work. When you look at the data, it is rapid, it is durable. Lastly, I want to talk about is the convenience piece, because I do think it matters. With that profile, I think it is a very strong one to have, that will take to payers because we know the access piece. But it starts there, and I am excited about this molecule. You can talk about the label and the safety. On the safety side, we have to do our job around educating. We have had a few of these education sessions. People are flocking to learn more, and they are excited about it, too. But we are different, and I will let you speak to the selectivity and the label. Yeah. Just to accent what Rhonda just said, we are a TYK2 inhibitor. There is no activity on JAK. The challenge that we face is that TYK2s and JAK1, JAK2, JAK3 are part of the same family of kinases. The first molecule that went to market did not have the efficacy profile that we did, and actually was not a selective molecule. There is baggage and there is a perception issue that Rhonda is going to have to work through. We have not seen any safety issues that suggest anything related to JAK. Like you said, we have to work with the FDA now along the review period and ultimately towards the label. It would be very surprising if there was any monitoring related to JAK in this label. Right. I think the key is going to be what Rhonda is saying, is overcoming these perception issues. Great. I think you already have got the one-year safety data of your psoriasis studies in hand. Maybe you may have submitted that one-year data to FDA as well. Is that fair to assume that? Yes. Oh. One of the reasons that we did not submit the file to FDA when we finished the two phase III studies is that we had to generate a larger safety base of patients exposed on zasocitinib for a year. We have now completed a full dedicated safety study. Actually, there is great efficacy in that study that we will present at a future congress. We now have a very rich compendium of safety data. Again, no JAK-related safety effects. Even with that one-year data as well, you have not seen any- That is right. -additional finding. That's right. Exactly. Great. Nothing that's new from the safety profile that we've presented. Great. The next investors' interests are beyond the psoriasis. So IBD, UC, CD indications. Maybe the psoriasis would be the 30 mg per day, QD per day. I know that you have not disclosed the dosage precisely about the IBD, UC, CD indications. But could you share some more color on the increased dosage in UC, CD? And based on that accumulated safety evidence of psoriasis use, can we assume that we should or can I think that I should not so much concern about the safety profile in higher dosage, i.e., in IBD indications? Yeah. So maybe just again dialing up. I would say three buckets of indications for TAK-279. Psoriasis, psoriatic arthritis, great psoriasis data, psoriatic arthritis phase III data coming out next year. IBD, I'll come back to that. Then we have two additional autoimmune inflammatory indications, vitiligo and HS. Those are both phase II studies. There's a lot of rationale for why we should see efficacy. There's a lot of interest in vitiligo in particular. So we'll be very excited to see the results of those two studies next year. Now, IBD is what you asked, and you were talking earlier about how there's some skepticism around the mechanism. Maybe I'll offer my thoughts and why I'm enthusiastic. There are three levels of evidence that suggest that a TYK2 inhibitor should be effective in IBD, UC and Crohn's. One is that the cytokine inhibitors, like IL-23 inhibitors and others, all signal through TYK2, and we know that they're highly efficacious. Two, animal model data, and three, perhaps the most compelling, human genetics. 1 in 500 people of Caucasian descent walk around with 90% reductions in TYK2 activities, and very few of them get Crohn's disease. They are protected from Crohn's disease, slightly less so, but also ulcerative colitis. We think part of the challenge with the mechanism and part of the reason these perception issues exist is that there have been two failed studies with TYK2 inhibitors. We believe that there are two reasons for that. One is the dose. In at least one of the studies, we don't think that the exposures were high enough to what is necessary in IBD. Then the second we think is experimental design and operationalization of the study. Regardless, our trials are ongoing. They'll read out this year. We're starting at the 30 mg QD dose, which is the psoriasis, psoriatic arthritis dose, and we're going up to a dose that's significantly higher than that. My level of confidence is very high for Crohn's, slightly less for UC based on the genetic data. I think the big question will be competitiveness. That's something we'll have to wait and see. Of course, your question about extrapolating safety. If we go with the 30 mg dose, I think there's a lot of safety extrapolation. If we go with a higher dose, there's some, but obviously we'll have to generate that safety database. You said by the end of this year. End of this fiscal year. Fiscal year. Fiscal year, yeah. After the capital market today. Definitely after the capital market today. Definitely. Both UC and CD? The UC study is going a little bit faster than the Crohn's disease study, so we will likely have data from that study first, but we will disclose data. There are a variety of reasons for doing that, not just Takeda positioning, but in terms of how you run the studies. We will disclose data from both together. Both together. Yeah. In maybe January, March, around that time. At the end of the fiscal year. At the end of the fiscal year. Yeah. Okay, got it. In terms of the market potential, so in psoriasis, you already two years ago have said $3 billion-$6 billion. That is the maximum. I believe that. But in terms of the IBD, UC/CD indications, what can we fairly expect the potential peak sales of your zasocitinib? Yeah. I will take that one, but you are not going to like the answer. Right now, we do not have peak sales yet for the IBD. Like you said, the $3 billion-$6 billion is for PSO and PSA. Yeah. I think we did back a couple of years ago, 2024. We are not changing those. I think we feel really good about where we are with zasocitinib in that space. But too early to give you a number on the peak sales of IBD. I think we need to see some of this data, too. Can we expect at the capital market today some update on IBD potential peak sales and TYK2 peak sales potential as well? I think we need to see the data first, but Oh, okay. I do not want to commit that you will see that in December, but if it is ready, then we will do it, but I cannot commit to that right now. Okay, got it. Sorry. Only one minute left, so I ask too much about the two franchises. Briefly, Innovent products. I think 2026 - 2027, or first half 2027 is the year of launch of the three key products for U.S. But after the launch of the zasocitinib in March, after that, I am a bit worried about the lack of the data readouts of your pipelines, but Innovent products may fit well. Could you give us the timeline of the data readout of Innovent products or other highlighted compounds especially in 2027? Yeah. We will have a lot. It will be a steady flow of data readouts. Next year you have psoriatic arthritis. End of this year, we talked about TAK-279 IBD. Next year you will have TAK-279 zasocitinib in HS and vitiligo. We have a molecule that we have not talked much about, which is elritercept, which we are studying in acute ischemic stroke phase II study. It is very exciting. We will have data from that program next year. For the Innovent programs, we will have continual data coming out from China, particularly for TAK-928 and TAK-921. Then the following year we will have elritercept, mezagitamab, fazirsiran, so there is a really steady stroke. It is not just these three launches, but it is a pipeline that gets sustained behind it. Great. Many, many launches. Many. Many, many. It will be fun. Yeah. Great inflection point to come. Yeah. Okay. Thank you very much. Time is up. Thank you very much. Thank you. Thank you very much. Thank you.