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DATE

Thursday, July 30, 2026 at 6 a.m. ET

CALL PARTICIPANTS

• Head of Investor Relations - Christopher David O'Reilly
• President and Chief Executive Officer - Julie Kim
• Chief Financial Officer - Milano Furuta
• President, R&D - Andy Plump

TAKEAWAYS

• Revenue -- JPY 1.22 trillion, up 10.2% on an actual exchange rate basis but down 0.5% at constant exchange rates as growth in core brands was offset by generic erosion of Vyvanse.
• Core Operating Profit -- JPY 358.9 billion, representing a 0.5% decline at constant exchange rates as the company increased investments in upcoming product launches.
• Core EPS -- JPY 154, a decrease of 11.8% at constant exchange rates reflecting a favorable tax position in the prior-year period.
• Entyvio Performance -- JPY 242.3 billion in revenue, growing 4% at constant exchange rates driven by continued demand for the subcutaneous pen formulation.
• New Product Launches -- JPY 48.8 billion in combined revenue, representing 22.6% growth at constant exchange rates from brands including Fruzaqla, Livtencity, and Adzynma.
• Adjusted Free Cash Flow -- JPY 68.6 billion, a 63.9% year-over-year decrease resulting from changes in working capital and a $200 million payment to Protagonist Therapeutics.
• Protagonist Therapeutics Opt-Out -- $200 million payment made by Takeda Pharmaceutical Company Limited (TAK +2.53%) following Protagonist's decision to opt out of U.S. co-promotion for rusfertide.
• Net Debt to Adjusted EBITDA -- 2.7x, a slight increase from 2.6x at the end of the previous fiscal year.
• R&D Expenditures -- JPY 167.4 billion, increasing 6.8% at constant exchange rates to support late-stage pipeline programs like TAK-928 and TAK-921.
• Zasocitinib Phase III Results -- 35% of patients achieved PASI 100 at week 16, demonstrating statistical superiority over deucravacitinib in a head-to-head psoriasis study.
• TAK-928 Efficacy -- 42% overall survival at two years in patients with IO-resistant non-squamous non-small cell lung cancer.
• Orzeyful Launch Timing -- Second half of 2026, targeting narcolepsy type 1 patients in the U.S. and Japan following a first approval in China.
• Rusfertide PDUFA Date -- August 2026, with a global launch expected to follow immediately after U.S. FDA approval.
• Zasocitinib Commercialization -- First half of 2027 launch targeted for the U.S. market, with payer discussions and pre-launch preparations already underway.
• FY2026 Revenue Guidance -- JPY 4.64 trillion, expecting foreign exchange tailwinds to offset the negative impact from products losing patent exclusivity.
• FY2026 Core Operating Profit Guidance -- JPY 1.16 trillion, reflecting higher operating expenses for new medicine launches.
• FY2026 Adjusted Free Cash Flow Guidance -- JPY 650 billion to JPY 750 billion, supported by anticipated organizational transformation savings.
• Capital Expenditures Outlook -- JPY 330 billion to JPY 380 billion, including payments related to the Protagonist Therapeutics agreement.
• Vyvanse Generic Erosion -- Significant impact on the mature products portfolio following the entry of generic competitors in the U.S. market.
• Enterprise Transformation Program -- Expected to deliver structural margin expansion by optimizing operations and reallocating capital to high-growth assets.

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RISKS

• Kim stated, "the submission for NRDL approval only -- the window is only once per year. And so the approval came after that window. So we won't be able to submit for NRDL until next year, meaning NRDL listing wouldn't be available until January of '28," explaining a delay in the full commercial launch of Orzeyful in China.
• Furuta noted, "Operating cash flow was lower than prior year, reflecting changes in working capital related to our trade receivables factoring program," citing a specific impact on liquidity during the first quarter.

SUMMARY

Takeda Pharmaceutical Company Limited is executing a two-horizon strategic roadmap focused on transitioning from organizational transformation to accelerated revenue growth and margin expansion. Management reported that core in-line brands and a 22.6% increase in new product revenue are currently offsetting anticipated headwinds from generic erosion in the mature portfolio. The company is preparing for three transformative product launches within the next 12 months, supported by a pipeline of 30 clinical programs. To fund these initiatives, the company is implementing a global transformation program aimed at improving return on equity to above 5% and protecting core operating margins through disciplined cost management.

• CEO Kim reported that Orzeyful has received its first approval in China for narcolepsy type 1, with U.S. and Japan regulatory decisions expected during the second quarter of fiscal year 2026.
• President of R&D Plump highlighted zasocitinib's Phase III performance, stating, "this is the best 16-week efficacy in psoriasis that we have seen from a pill."
• Management indicated that the Protagonist Therapeutics opt-out provides the company with sole responsibility for global commercialization of rusfertide, a hepcidin mimetic for polycythemia vera.
• CFO Furuta emphasized that the first quarter results remain on track for full-year guidance despite higher restructuring expenses and growth investments.
• Plump noted that Orzeyful Phase III data showed a normative shift in REM latency for narcolepsy patients, describing the objective shift in sleep as "unprecedented."
• The company announced a Capital Markets Day for Tokyo on Dec. 11, 2026, where it will provide a deep dive into mid-term to long-term financial ambitions.

INDUSTRY GLOSSARY

• CER (Constant Exchange Rate): A method of calculating financial results that removes the impact of currency fluctuations to compare year-over-year performance.
• IBD (Inflammatory Bowel Disease): A group of disorders, including Crohn’s disease and ulcerative colitis, that involve chronic inflammation of the digestive tract.
• NRDL (National Reimbursement Drug List): The official list of medicines covered by China’s national medical insurance system.
• NT1 (Narcolepsy Type 1): A chronic neurological disorder characterized by excessive daytime sleepiness and cataplexy, caused by a deficiency of orexin.
• PASI 100 (Psoriasis Area and Severity Index): A clinical metric representing 100% or complete skin clearance in patients with psoriasis.
• PDT (Plasma-Derived Therapies): Medicines manufactured from human plasma used to treat rare and complex chronic diseases.
• PDUFA (Prescription Drug User Fee Act): The date by which the U.S. FDA aims to complete its review of a new drug application.
• TYK2 (Tyrosine Kinase 2): An intracellular signaling kinase that is a target for treating various immune-mediated inflammatory diseases.

Full Conference Call Transcript

Christopher David O'Reilly: [Interpreted] Thank you very much for joining us today despite a very busy schedule for the FY '26 Q1 earnings announcement by Takeda. My name is O'Reilly, and I'm the Head of IR. I'll be facilitating the discussion today. Thank you for this opportunity. And first of all, allow me to explain about the language setting. [Operator Instructions] Before starting, I'd like to remind everyone that we will be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause our actual results to differ materially are discussed in our most recent Form 20-F and in our other SEC filings.

Please also refer to the important notice on Page 2 of the presentation regarding forward-looking statements and our non-IFRS financial measures, which will be also discussed during this call. Definitions of our non-IFRS measures and reconciliations with comparable IFRS financial statements are introduced in the appendix of the presentation. Now we would like to start the presentation. We have President and CEO, Julie Kim; Chief Financial Officer, Milano Furuta; and President, R&D, Andy Plump. They will do the presentation, which will be followed by the Q&A session. We will get started. Julie, please go ahead.

Julie Kim: Thank you, Chris. Thank you for joining us for today's earnings call focused on the first quarter of fiscal year 2026. We delivered a solid start to the fiscal year, and our performance this quarter demonstrates steady progress against our strategic priorities, keeping us firmly on track to achieve our full year guidance. These achievements reflect our continued execution against the 2-Horizon strategic road map we shared last quarter, which will position us for accelerated growth in the years ahead to expand impact for patients and set the stage for sustained value creation. Today, I will outline this quarter's progress against our priorities. Financially, we delivered a solid quarter and made steady progress against our fiscal year '26 priorities.

In the first quarter, core revenue declined slightly at 0.5% at constant exchange rate, or CER, in line with our expectations as momentum across our core in-line brands and existing new launch brands largely offset anticipated headwinds in our mature portfolio. Core operating profit declined 0.5% year-over-year at CER, reflecting the continued investment behind our upcoming launches and exciting late-stage pipeline, which we are partially offsetting by savings generated through our transformation program. And core EPS was JPY 154, a decrease of 11.8% at CER, mainly due to a favorable tax position in the prior year.

Milano will walk you through the financial dynamics in more detail shortly, but the key takeaway is that we are well on track towards our full year guidance. This quarter, we had strong execution across all Horizon One priorities. We are ensuring the resilience of our existing portfolio with our core in-line brands growing by 2.3% at CER. We also continue to execute against our transformation program. As an example, we have largely completed the implementation of our international business unit, which is bringing leadership and teams closer to patients and customers and supports more simplicity, speed and efficiency. We'll do all of this without sacrificing quality to help us move at pace to bring life-transforming medicines to patients.

Takeda's consistent and effective execution of our enterprise transformation is enabling us to fund our launches and advance our pipeline. It also represents a fundamental change in how we work today and how we will grow as a company in the future. We also made excellent progress across the pipeline this quarter. We are pleased to have received our first approval for oveporexton in narcolepsy type 1 under the brand name ORZEYFUL in China, and approvals in U.S. and Japan are key milestones expected in Q2. I will speak more about the important milestones and progress towards launch for ORZEYFUL, rusfertide and zasocitinib on the next slide.

In oncology, we presented TAK-928 data at ASCO in first- and second-line non-small cell lung cancer. And we initiated a Phase III study of elritercept in first-line anemia-associated MDS. Taken together, our 3 priorities for FY '26 remain firmly on track, continue advancing preparations for the successful launch of ORZEYFUL, rusfertide and zasocitinib, progress the next wave of our pipeline and continued execution of our transformation program to unlock new capabilities and efficiencies. We continue to build the foundation for our future growth by preparing to bring new medicines to patients. With the first ORZEYFUL approval obtained in China.

We eagerly look forward to bringing our first-in-class orexin agonist for narcolepsy type 1 to patients in the U.S. and Japan as well, with launches expected in the second half of 2026. ORZEYFUL has delivered transformative efficacy across a broad range of NT1 symptoms. At the SLEEP 2026 meeting, we presented additional ORZEYFUL Phase III data, reinforcing the potential of this medicine to establish a new standard of care by improving measures of daily function, cognition and nighttime sleep in patients with narcolepsy type 1. Rusfertide, our potential first-in-class hepcidin mimetic for polycythemia vera has demonstrated rapid, stable and durable hematocrit control while reducing patients' reliance on phlebotomy. Rusfertide has obtained U.S.

FDA priority review, and we expect a U.S. launch also in the second half of 2026. Following Protagonist's opt-out from U.S. co-commercialization, we are excited to have sole responsibility for commercializing rusfertide globally, and we are committed to maximizing its growth potential and impact on patients. Turning to the third of these transformative medicines, zasocitinib is our potential best-in-class oral treatment for psoriasis, delivering rapid and durable skin clearance in a convenient once-daily pill with no fasting restrictions. We are on track towards launching in the U.S. in the first half of 2027. Our confidence in its profile is stronger than ever.

In our recent head-to-head Phase III psoriasis study versus deucravacitinib, zasocitinib demonstrated statistical superiority for all primary and key secondary endpoints with more than 35% of patients achieving PASI 100 or complete skin clearance at week 16. We also shared new data this month from the pivotal Phase III psoriasis studies, demonstrating that zasocitinib achieved consistent high rates of skin clearance across the body, including hard-to-treat and high-impact sites. Andy will talk more about this in a few minutes. Importantly, we are not just generating compelling data. We are continuing to lay the groundwork for successful launches. For ORZEYFUL, we have had Medical Science Liaisons in the field for more than a year.

We've engaged payers and KOLs, and we've set up specialty pharmacy and patient support programs to facilitate an exceptional patient experience. For rusfertide, we are building HCP awareness of the importance of sustained hematocrit control and leveraging our established hematology commercial infrastructure to ensure we're ready for a successful launch. For zasocitinib, payer discussions and broader prelaunch preparations are already underway, supporting our ambition not only to gain market share, but also to expand the oral treatment segment. Our efforts are planful. We believe they will enable us to ensure these transformative medicines will reach patients as quickly as possible, delivering on our commitments in Horizon One and positioning Takeda for accelerated long-term growth.

These milestones reinforce the depth of our late-stage pipeline and reflect the sustained disciplined commitment we have to faster AI-enabled discovery and development, strong market access and best-in-class scientific, medical, manufacturing, technology and commercial capabilities. Today, we are in Horizon One and fundamentally transforming Takeda from within. This includes optimizing our operations, strengthening our competitiveness and successfully launching new medicines that will become our future growth drivers. As I just shared, this phase is progressing well through our launch preparation, pipeline progress, core in-line brand resilience and execution of our transformation.

To provide an additional example, we recently announced a landmark collaboration with the Indonesian government to build plasma operations in the country, starting with establishing plasma donation centers and assessing the feasibility of potential future manufacturing capabilities. Partnerships like this support the growth of our PDT business and the competitive resilience of our core in-line brands while reinforcing our commitment to a sustainable global plasma ecosystem. Throughout this period, we are committed to a clear set of performance measures, returning to top line growth, protecting our core operating profit margins while making substantial growth investments and improving our return on equity to above 5%.

The entire Takeda team is working diligently to execute on our priorities and establish a strong foundation in Horizon One. Every milestone we accomplish reinforces our path of progress towards Horizon Two growth acceleration. Our employees' relentless dedication and discipline will continue to set the stage for sustained value creation for patients and shareholders. With that, I will hand the call over to Milano to walk through our first quarter financial results in more detail.

Milano Furuta: Thank you, Julie, and hello, everyone. Let me walk through our financial highlights for Q1 of fiscal year 2026. Overall, our Q1 results are on track towards full year guidance. Revenue was JPY 1.22 trillion, an increase of 10.2% on an actual FX basis or a decline of 0.5% at constant exchange rates or CER. Core operating profit was JPY 358.9 billion, up 11.5% at actual FX or minus 0.5% at CER, while reported operating profit was JPY 201.4 billion. Core EPS was JPY 154 with an 11.8% decline at CER as expected, mainly reflecting tax favorability in the prior year. Reported EPS was JPY 72.

Operating cash flow was lower than prior year, reflecting changes in working capital related to our trade receivables factoring program. Adjusted free cash flow also reflects a payment of USD 200 million to Protagonist following the decision in April to opt-out of our co-promotion agreement for rusfertide. As Julie highlighted, this means that Takeda now holds exclusive development and commercialization rights for rusfertide globally. Overall, we are on track to deliver JPY 650 billion to JPY 750 billion free cash flow for the full year. Slide 10 shows a revenue bridge versus prior year.

At CER, core revenue declined 0.5% as growth from core in-line brands and new launches largely offset the decline from LOE and mature products, which includes the continued generic erosion of VYVANSE in the U.S. Core in-line brands represented 58% of total revenue and grew 2.3% at CER, which is on track with our expectations for Q1. Our largest product, ENTYVIO, remains resilient with 4% growth at CER, while immunoglobulin and albumin were both impacted by phasing in the U.S., which was within our expectation. Our new launches category is still small today, only 4% of total revenue, but it is growing strongly at 22.6% at CER, supported by FRUZAQLA, LIVTENCITY, ADZYNMA, QDENGA.

We're excited at the prospect of introducing new products to this category with the potential launches of ORZEYFUL and rusfertide later this year. Finally, FX was a big positive to our top line, adding JPY 118.2 billion to deliver 10.2% growth at actual exchange rates. Slide 11 shows a bridge for core operating profit. Consistent with our priorities in Horizon One, we have positioned fiscal year 2026 as a year of growth investments funded by savings from our transformation program. The transformation program is firmly on track, as Julie commented earlier. However, many of the initiatives were implemented at the end of the quarter, meaning the savings amount captured in Q1 results is still relatively limited.

All the high priority growth investments are on track, including launch readiness for ORZEYFUL, rusfertide and zasocitinib as well as progress of late-stage development programs such as TAK-928 and TAK-921. We continue to demonstrate cost discipline alongside targeted investments. And finally, you can see in the chart that gross profit was positive in Q1, primarily driven by favorable FX variance in cost of goods as well as a one-time divestiture-related milestone. Next, reported operating profit on Slide 12. As you can see in this chart, the 2 main factors impacting year-on-year performance were lower amortization of intangible assets, mainly due to the completion of VYVANSE amortization in January 2026 and higher restructuring expenses related to the transformation program.

FX also provided a tailwind, resulting in 9.1% growth versus prior year at actual exchange rates. Slide 13 shows our full year fiscal 2026 outlook, which is unchanged from May. And our Q1 performance was fully on track towards our targets for this year. I will close my section of the presentation by reemphasizing our commitment to strict financial discipline through our 2 growth horizons. In particular, during this Horizon One, our focus is on returning to revenue growth, protecting operating profit, improving reported profit and ROE and maintaining strong adjusted free cash flow. I look forward to sharing our ongoing progress towards these goals. Thank you. And I'll now pass to Andy for updates on the pipeline.

Andrew Plump: Thank you, Milano, and hello to everyone on today's call. I want to frame this quarter simply. Takeda R&D is ready to convert pipeline progress into commercial performance that supports our 2-Horizon growth strategy. Over the coming months, we are poised to launch 3 transformative medicines: ORZEYFUL, rusfertide and zasocitinib, each with the potential to redefine the standard of care in its field and together setting Takeda on a new growth trajectory. Let me begin with ORZEYFUL, which I believe is one of the most exciting stories in neuroscience today. Narcolepsy type 1 is a lifelong disorder caused by the loss of orexin signaling, leading to disabling daytime and nighttime symptoms.

At the 2025 World Sleep Congress, we presented groundbreaking results from 2 Phase III studies that met all 14 primary and secondary endpoints, demonstrating statistically significant and clinically meaningful improvements. ORZEYFUL delivered transformative efficacy across the broad disease spectrum, including daytime symptoms like excessive daytime sleepiness and cataplexy as well as nighttime symptoms, cognitive symptoms, functional improvements and quality of life. ORZEYFUL doesn't just manage symptoms, it addresses the underlying orexin deficiency in NT1, offering patients a single, well-tolerated oral therapy that could restore how a majority of NT1 patients feel and function. We are on track to bring the first and only orexin agonist to patients living with NT1.

As Julie mentioned, we have received our first approval in China, and we eagerly await decisions in the U.S. and Japan this quarter. At SLEEP 2026, we presented additional Phase III data that I would describe as remarkable with improvements spanning daily function, cognition and nighttime sleep. Let me share a few of the highlights. Using the functional impacts of narcolepsy instrument, or FINI for short, we saw significant improvement across all functional domains with p-values below 0.0001, including benefits to cognitive functioning, social activities, everyday activities and daily responsibilities. These important benefits led to significant gains in work productivity, activity impairment and quality of life.

On cognition, we saw improvement versus placebo in attention, memory and executive function, each with a very significant p-value. On nighttime sleep, I want to dwell for a moment on the striking REM latency finding. REM latency is the time it takes to enter the first REM sleep stage after falling asleep. REM sleep disturbances can manifest as sleep paralysis, sleep-related hallucinations and sleep disruptions. At baseline, our NT1 patients had a mean REM latency of about 50 minutes against a healthy control value of roughly 130 minutes. ORZEYFUL shifted mean REM latency into the normative range across all treatment groups in both the First Light or 3001 study and the Radiant Light or 3002 study.

This objective shift in sleep is unprecedented. To keep it simple, we are showing data from the Radiant Light study. Both trials produced similar results. As you can see, the objective REM shift is corroborated by the subjective assessments. We measured the subjective effects on REM [ linked ] sleep using the NSS-CT or Narcolepsy Severity Scale for clinical trials, a validated instrument used in narcolepsy. ORZEYFUL significantly reduced hallucinations and sleep paralysis in all treatment groups. And it did so with no clinically meaningful disruption to sleep architecture. In practical terms, we are significantly improving, often normalizing a patient's day and night. Now let me turn to zasocitinib, our next-generation, highly selective and potent oral TYK2 inhibitor.

Here, too, the data speak for themselves. In our Phase III head-to-head psoriasis study, zasocitinib significantly outperformed deucravacitinib. At week 16, more than 35% of zasocitinib-treated patients achieved complete skin clearance as measured by PASI 100. We have 2 key takeaway messages from these top line results. One, this was a well-run trial with deucravacitinib having data consistent with past Phase III trials. Two, this is the best 16-week efficacy in psoriasis that we have seen from a pill. Zasocitinib is poised to be a leading oral option with a fantastic efficacy and safety profile. Full details will be shared at a medical meeting this fall.

What gives us additional confidence is the performance in the hard-to-treat high-impact areas like psoriasis of the scalp, palms and soles as demonstrated here by the high rates of skin clearance in the Phase III LATITUDE programs as well as statistically significant benefits to nails. These are the places where psoriasis can have greatest day-to-day impact for patients who are among the hardest to treat. The new psoriasis data continues to add to our library of outstanding Phase III results. I'd like to take a moment to remind you that zasocitinib is far more than just a psoriasis story.

As you can see here at the top, zasocitinib has studies underway across a broad range of immune-mediated diseases like Psoriatic Arthritis, Crohn’s Disease, Ulcerative Colitis, Vitiligo, and Hidradenitis Suppurativa. Zasocitinib is a molecule we believe could redefine what is possible with a convenient once-daily oral therapy. We anticipate a Phase II data readout for Crohn's disease and ulcerative colitis at the end of our fiscal year 2026. Our orexin franchise continues to advance. ORZEYFUL has initiated the important 3003 Phase III study, which will support filing in Europe. This potentially label-enabling trial will, for the first time, generate clinical data on direct switches from polypharmacy to ORZEYFUL.

In addition, for the small number of patients who may benefit from dose escalation, the trial will include a higher dose option. Beyond ORZEYFUL, we are advancing TAK-360 in narcolepsy type 2 and Idiopathic Hypersomnia and anticipate Phase II data later this calendar year. The third of our imminent launches is rusfertide, a first-in-class hepcidin mimetic for polycythemia vera. Rusfertide delivers rapid, stable and durable hematic control, addressing a major unmet medical need in PV. It is filed in the U.S. with an EU filing targeted later this fiscal year. We have an August PDUFA date and anticipate launch immediately thereafter. Now I want to be clear that our story does not end with these 3 assets.

They are the starting acts of the most robust late-stage pipeline in Takeda's history. And as we continue through Horizon One, we will advance the next wave of pipeline progress with key readouts and milestones. As Julie shared earlier, in oncology, elritercept has started 2 Phase III trials in first- and second-line myelodysplastic syndrome and will soon start a pivotal trial in myelofibrosis. We presented important updates at ASCO in June for TAK-928, our PD-1/IL-2 alpha-biased bispecific fusion protein. First, in patients with second-line plus IO-resistant non-squamous non-small cell lung cancer, an area of great unmet need, we showed a 42% overall survival rate at 2 years.

We are planning for a pivotal Phase III in this refractory population later this fiscal year. In first-line non-small cell lung cancer patients with less than 50% PD-L1 expression, we were excited to see outstanding early data for TAK-928 in combination with chemotherapy with favorable safety data. We are looking forward to additional data cuts in the coming months as the trial matures. TAK-921, also known as arcotatug tavatecan, is an oncology program that has received less attention but remains highly promising. Strong progression-free survival data was announced from our partners at Innovent in June from a regional Phase III trial in third-line gastric cancer.

We plan on filing in Japan in fiscal year 2027 using mature overall survival data from this trial. In PDT, TAK-881, our 20% next-generation facilitated [ subcu Ig ] is advancing towards a U.S. filing in primary immunodeficiency and filings in multiple indications in Europe and Japan. Let me close where I began. What you're seeing from Takeda R&D is the result of our sustained focus on pursuing science where we have the depth to lead. and commitment to disciplined choices that allow us to advance programs with the most meaningful patient potential. ORZEYFUL, rusfertide and zasocitinib are the leading edge of that strategy.

And behind them is a pipeline with the depth to sustain this momentum well into the future. If we take a step back, we anticipate U.S. launch of ORZEYFUL in the second half of 2026, rusfertide launch in the second half of 2026 and zasocitinib launch in the first half of 2027, 3 potential new standards of care launching in close succession, 2 of which carry breakthrough and Fast Track Designations. This is the launch cadence that underpins our confidence in Takeda's growth trajectory. I have never been more confident in the science, and the team behind it and in our ability to improve patients' lives and build a healthier world for generations.

I look forward to sharing our continued progress with you. Thank you. And with that, I'll turn it back to Julie to wrap up the presentation. Julie?

Julie Kim: Thank you, Andy. As you have heard, the momentum across our R&D organization is translating directly into tangible milestones with the goal of bridging us from transformation to growth acceleration. We are also dedicated to operational discipline, and our enterprise transformation is already starting to unlock capital to reinvest in our pipeline and launches. In summary, we are delivering on our priorities in Horizon One towards a clear set of operational and financial goals. These milestones will enable us to secure a strong foundation that will advance us to Horizon Two, an era that will be defined by accelerated revenue growth, structural margin expansion and sustained value creation.

We know our shareholders are eager to discuss more details of this path forward, and I am pleased to announce that we will host a Capital Markets Day in Tokyo on December 11, 2026. At that event, the executive team and I will provide a deep dive into our pipeline progress and mid- to long-term financial ambitions in-line with our 2-Horizon strategic road map that will guide our growth through the end of the decade and beyond. We have the right strategy, a highly competitive portfolio and a united, deeply committed global team. I am proud of the progress we made this quarter, and I am incredibly energized by the trajectory we are on.

With that, I'll now turn the call over to Chris for Q&A.

Christopher David O'Reilly: [Interpreted] I would like to take questions from the participants.[Operator Instructions]. The first question is Yamaguchi-san from Citigroup. Please unmute and ask your question.

Hidemaru Yamaguchi: Yamaguchi from Citi. I have 2 questions. The first question is the overall earnings. And Milano-san mentioned gross margin on the Q1 seems to be relatively high compared to full year guidance. And you talked about some mix -- product mix, but also you talked about some divestiture related things. So how much is contributing this divestiture thing? And is this just a one-off or not? So can you give me a comment on those gross margin prospects, Q1 and full year? The second question is that you may not have answered yet, but ORZEYFUL has been -- is now launched approved in China and also will be launched -- will be approved in the U.S. and Japan.

Can you give me the overall strategy, how you're going to position this drug compared to the current therapy? Are you going to add on or are you going to replace? Are you going to take the new patients? Or are you going to take the share from the existing patients? How about the pricing strategy? So if you have any kind of general strategy on a global basis on ORZEYFUL, please let me know. Those are 2 questions.

Christopher David O'Reilly: Thank you, Yamaguchi-san. So the first question on breakdown of gross margin performance. So Milano can take that. And then the second question on ORZEYFUL as we prepare for global launch, any additional commentary on positioning, where we'll get the patients pricing, et cetera? Julie, you can comment on that one. Milano?

Milano Furuta: [Interpreted] Thank you very much, Yamaguchi-san, for your questions. I think according to the several points Yamaguchi-san mentioned, I'd like to give you a response. As you mentioned, the gross margin in this quarter compared to the same quarter last year by about 1.4 points, visibly, there was an improvement observed. And actually, the impact from the product mix was more or less neutral. And you also mentioned one-time factor. That contribution was relatively small. It is divestiture-related technology transfer, which was completed. And as a result, we had a one-time milestone gain or income that impacted us the reduction of cost of sales.

And however, it is a small portion of Q1, and it is much smaller in the full year. Therefore, in the full year basis, it is almost negligible. And actually, in the Q1 for the gross margin enhancement, PDT contributed most greatly. There was a transactional FX. In this quarter, it worked in a positive direction. And it is because of past year's FX levels. The euro against the U.S. dollar was appreciated. As a result, PDT cost of goods improved. And regarding your question about the full year outlook, we have just finished Q1. And in May, we mentioned the 65%. And based upon the FX movement moving forward, we'll be giving an update as it's necessary.

But at the moment, we are maintaining the 65%.

Julie Kim: Thank you, Yamaguchi-san, for the question about ORZEYFUL positioning. So let me share a few thoughts with everyone on this. First, just a quick reminder why we're so excited about ORZEYFUL. It is the first-in-class and potentially best-in-class orexin agonist designed to treat the underlying orexin deficiency that causes NT1. And as you saw from the information that we've shared previously and Andy shared on the call today, the efficacy across broad disease spectrum is really impressive. And so we do anticipate that ORZEYFUL will redefine the standard of care in NT1. So in terms of how we expect ORZEYFUL to be used, we studied it as a monotherapy.

So that is our anticipation that ORZEYFUL is an effective monotherapy treatment. In terms of where the patients will come from, I would say there's 2 sources. First and foremost, we will be addressing the patient need for individuals who are already diagnosed with NT1 and already on therapy. That will be the initial source of growth for ORZEYFUL. The second source of growth will come from improved diagnosis. This will take a bit longer time in order to drive better diagnosis, but that would be the second source of growth. And then I think your third question was on pricing for ORZEYFUL. So obviously, we don't share pricing at this point ahead of launch.

But our -- in general, our approach to pricing is to ensure appropriate value recognition for the transformative nature of the medicine, but at the same time, support fast access as this is a significant breakthrough in treatment option for individuals with NT1. Thank you.

Christopher David O'Reilly: [Interpreted] Next question from Morgan Stanley, Muraoka-san. Please ask your question.

Shinichiro Muraoka: [Interpreted] This is Muraoka, Morgan Stanley. First question is about 360. 360 data presentation, will that happen before the Capital Markets Day or will happen at the same time as the Capital Market Day? So 360 NT1 Phase II has actually started. Can you please talk about the background? Do you want to have flexibility in terms of pricing strategy? Or do you feel that once daily is going to be necessary? What is the background or the reasoning? That's my first question. And the second question is Zaso UC/CD , how the information will be shared? I heard information will be shared at the end of the year.

And is this announcement going to be for both UC and CD together? And is it going to be in the form of press release? And can we expect this information maybe during the earnings announcement for the third quarter? How do you intend to share this information? That's the second question.

Christopher David O'Reilly: Thank you for the questions. So the first on TAK-360 data disclosure timing, would that be ahead of the Capital Markets Day in December? And then what is the positioning or the background behind studying TAK-360 in narcolepsy type 1? And then the second question on timing of zasocitinib UC and CD data and also how that data would be presented? Will you announce the results of both studies simultaneously? So both of these questions, I'd like to call on Andy to comment on those, please.

Andrew Plump: Great. Thanks, Chris, and thank you very much, Muraoka-san. This is Andy Plump. So firstly, with respect to TAK-360, -- so as I'll just remind everybody, the TAK-360 is in the midst of 3 ongoing Phase II studies, one in idiopathic hypersomnia, one in type 2 narcolepsy and then recently started one in type 1 narcolepsy. In terms of timing for the former 2, IH and NT2, the study design is such that is built around an adaptive design that allows us to rapidly pivot and explore both dose and dose regimen. We're testing both once a day and twice a day doses. So in such a design, we don't have a clear end date.

We will see data from that trial this year. The exact timing and whether it's available for the Capital Markets Day in December remains to be determined. In terms of the rationale for starting TAK-360 in type 1 narcolepsy, first, I'll say that we are extremely confident and you've seen the data for ORZEYFUL. We believe that ORZEYFUL is not just a first-in-class, but a best-in-class agent for type 1 narcolepsy. With that said, we're at the very front end of understanding what orexin agonist can do across a broad range of diseases. And so our interest is to continue to learn more and to continue to explore.

With respect to zasocitinib and IBD, both the UC and Crohn's disease trials are going well. We expect to have data by the end of this fiscal year. In terms of how and where we present those data, that's still something that we're sorting through. Thank you.

Christopher David O'Reilly: [Interpreted] Next is Matsubara-san from Nomura Securities, please.

Matsubara: [Interpreted] This is Matsubara from Nomura Securities. I have 2 questions. First is about ENTYVIO. In the first quarter, CER 3.8% increase was observed, and I believe [ SC ] contributed a lot. And compared to the last year, I think the customer base have been expanding. But what is the immediate situation right now? And what is the outlook? And next is the rusfertide, PDUFA is approaching in August. And regarding your pricing strategy, as you have discussions with the physicians, -- so how do you think about your pricing strategy? And how about your view of the [ patient ] burden in terms of pricing?

Christopher David O'Reilly: In the first quarter. So any comments on sort of prescription trends, how the performance is going for ENTYVIO? And then the second question on rusfertide, in particular, how you go positioning versus phlebotomy in terms of pricing strategy. So I think both of those questions, Julie, I'd like to ask you to comment on those, please.

Julie Kim: Thanks for the questions, Matsubara-san. Let me tackle ENTYVIO first. So when we look at ENTYVIO, as you know, it's been on the market for over a decade now, and we're pleased that we continue to be able to grow ENTYVIO. It's still the #1 prescribed brand in IBD overall, particularly with the first-line leadership in UC. And when you look at the performance in the U.S., I would say a couple of things. Although sales were down in Q1 year-over-year at constant exchange rate, we do see overall demand growth. The decline is due to pricing mix and lower days on hand.

When we look at the growth of pen, we continue to see very strong growth of ENTYVIO PEN in the U.S. And so we're pleased with that continued progression. For our markets outside of the U.S., here, we continue to see strong growth with 6.7% growth in Europe, 10% in Japan and the rest of our intercontinental markets at just about 36% growth. So again, very strong performance for ENTYVIO, driven by ENTYVIO subcu or the pen across all of our markets. So for the full year, we do expect to be able to hit our guidance. Your second question in terms of rusfertide pricing. So again, we won't share details of pricing at this point.

And I'll just reiterate that our approach to pricing is to make sure that we can receive appropriate value recognition for rusfertide, but also allowing rapid access for patients. So we will balance that as we look to finalize pricing.

Christopher David O'Reilly: For the next question, I'd like to call on Mike Nedelcovych from TD Cowen.

Michael Nedelcovych: I have 2. My first is actually on mezagitamab. Back in December 2024, you laid out a peak sales ambition in ITP and IgAN of USD 1 billion to USD 3 billion. Have there been any developments in either mezagitamab's development or in the competitive landscape that make you more confident in one or the other end of that range? And are there any indications being explored that could be added to this target in the near future? So that's my first question. And then my second question is on the risk of ENTYVIO biosimilars in the U.S. What's the road map from here to your estimated 2032 time line? What is the next step that we should be monitoring?

And is there any ENTYVIO PEN IP that could be -- that could extend exclusivity further than 2032?

Christopher David O'Reilly: Great. Thank you, Mike. So the first question on how we're progressing with mezagitamab and thoughts on recent developments in these markets. I think Andy can take that question. And then the second on biosimilars for ENTYVIO and sort of route from here to 2032 in terms of biosimilar entry and whether the pen gives us any extended IP. Julie can answer that question, please.

Andrew Plump: Mike, thank you very much. This is Andy. So as you know, we have 2 ongoing Phase III studies for mezagitamab. One is in third-line ITP and the other is in IgAN. We just recently started a Phase II program in antibody-mediated rejection. So we have 3 indications that are going rapidly with mezagitamab. We do continue to look at additional indications. So stay tuned. I think the -- to your question, the biggest development for us recently has been the recognition from our long-term extension data from our Phase Ib/II proof-of-concept study that with short-term dosing, we're seeing a very durable effect.

And we presented data, and I think I've shared it in previous earnings calls that with up to 6 months of therapy, we see sustained activity on clinical endpoints up to 2 years. So this is really exciting. The confidence we have that this is a real effect and can be -- and relates back to the underlying pharmacology of the drug and the biology of this disease, we think is real. So we actually made an adaptation to the Phase III design. Initially, the administration schedule was going to be 6 months off (sic) [ on ], 6 months off.

We've now decided to administer mezagitamab for 6 months and then track patients thereafter to the primary endpoint at 1 year and at 2 years. So we believe we have a product that not only is going to be differentiated in terms of its safety and efficacy, but also in terms of its administration schedule.

Julie Kim: Thanks, Mike, for your questions. And let me just add a quick comment because I think you did also inquire about peak sales estimates for Meza. So we're not changing any peak sales at this point. But when we get to the Capital Markets Day in December, we will provide peak sales based on current assumptions and current landscape. So hold until then for that information. In terms of your second question regarding ENTYVIO and timing in relation to biosimilar entry. So our time frames here have not changed. So when you look at the U.S., because I think your question was specific to the U.S., we expect it to still be roughly 3 to 5 years in litigation.

We will defend our IP positions. We feel very good about our IP position. And so this is something that we will continue to provide updates on, but no change in overall time line.

Christopher David O'Reilly: Thank you Mike. And so for the next question, I'd like to call on Miki Sogi from Bernstein.

Miki Sogi: I have 2 questions. The first one is to Andy about IBI-363. So on the Page 23, I see that you have achieved the proof of concept of this product for second-line non-squamous non-small cell lung cancer and first-line non-small cell lung cancer. So are these the data that we have not seen? And then we are also -- we should be expecting to see the data at ESMO this year? That's the first question. Second question is about the new product launches of oveporexton and rusfertide.

I was -- to be honest with you, I'm a little bit surprised that you didn't really mention any commercial launch preparation during this -- the presentation despite the fact that launch or approval is imminent. And I'd like to see what are the key operational KPI that you are currently thinking of for these product launches. And hopefully, we will get the update on that later on.

Christopher David O'Reilly: Thank you, Miki. So the first question on TAK-928 POC achievements as we've marked on this slide. So Andy can provide some color on that. And then the second question, ORZEYFUL, rusfertide launch preparation, what the operational KPIs will be, et cetera. Julie can comment on that one, please.

Andrew Plump: Great. Thank you, Miki. So just to remind everybody, IBI-363 or what we now call TAK-928 is our PD-1/IL-2 alpha-biased bispecific protein that we've partnered with Innovent on. We're pursuing multiple indications in parallel. We've already started a Phase III global program in IO refractory second-line squamous non-small cell lung cancer. And to your question, Miki, we now have very encouraging Phase I/II data out of our partners work at Innovent in both first-line non-small cell lung cancer and also second-line adeno or non-squamous non-small cell lung cancer. So those data were actually presented by Innovent at ASCO, and I can just provide some high-level summary information.

So firstly, in the refractory setting for patients with non-squamous or adeno non-small cell, we've seen really striking overall survival data. So 42% overall survival data at 2 years. And of course, it's difficult to compare study to study, but this is a population that at 2 years has an overall survival rate of approximately 20%. So we're very excited to get that Phase III study going. And then, of course, the largest population is going to be in frontline we had data that was presented -- we have maturing data that was presented at ASCO by our partners at Innovent that suggests response rates of upwards of 80%.

So we'll continue to track maturing data, but we're preparing to start that Phase III study later in this fiscal year.

Miki Sogi: Andy, I have a follow-up question on the first-line. I believe that the data that was presented at ASCO was dose escalation or dose selection phase and you are running or Innovent is running the dose expansion phase, which is actually hit -- the head-to-head against that KEYTRUDA plus chemotherapy, I believe. And I just wanted to see that if that dose expansion phase that with [ comparator ] data will be presented at ESMO. And -- so your part you're referring to doesn't really include that data.

Andrew Plump: Yes. So thank you very much. So of course, the Phase III study will be done depending on the mutation burden, it will be done either against a PD-1 pembro with chemo or versus a PD-1 alone. In terms of the maturing data, Miki, we don't have specific plans to share today as to when those data will be available, but we assure you that as those data mature, we would present them in a rapid fashion.

Julie Kim: So thank you for the question, Sogi-san. Maybe I wasn't excited enough in my voice. We did -- I did talk about the launch preparation during the presentation, but let me share in more detail so that you get a sense of what we've been doing. So first, I will tackle ORZEYFUL when you look at the -- and I'm assuming you're asking specifically about the U.S., although both China and Japan are also fully prepared in China, we now have the approval, as you heard. One thing I do want to say about China is that the submission for NRDL approval only -- the window is only once per year. And so the approval came after that window.

So we won't be able to submit for NRDL until next year, meaning NRDL listing wouldn't be available until January of '28. So between now and then, we will focus on private market and then the full launch will be after we receive -- hopefully, we receive NRDL listing. So in the U.S., as I mentioned during the presentation, we've had our MSLs in the field now for over a year. Focused on awareness and education around orexin and the mechanism of action. We've had our sales in the field mapping accounts, getting introduced to the sleep centers in particular. We've been running disease state education campaigns. We've been having payer meetings.

Our specialty pharmacy network and patient support programs are ready to go. So at this point, we are waiting for the FDA approval and then the subsequent DEA scheduling, and we'll be ready to go. For rusfertide, some very similar activities, again, in the field doing education and awareness. As I mentioned in previous calls, there is a sense of inertia in terms of the current level of treatment for polycythemia vera patients. They're viewed as a "good cancer patients". And so it's a lot of education we need to do to help shine a light on the burden that PV patients have.

We're also doing end-to-end patient experience programs that are, again, ready to go and of course, the payer engagements. So all of that is in play. In terms of the things that we -- metrics that we'll be looking at, it will be things like patient numbers, payer coverage and source of patients. So hopefully, that addresses your question.

Miki Sogi: Sure. Julie, I have one additional question. What is your -- the target of payer coverage after 12 months of launch? Commercial coverage.

Julie Kim: Yes. So we are trying to secure commercial coverage as quickly as possible. So at this point, I'm not going to share a target with you, but we want to make sure we have broad coverage.

Christopher David O'Reilly: Thank you, Miki. I think we'll take one final question. So we'll end with Stephen Barker from Jefferies.

Stephen Barker: Steve Barker from Jefferies. So congratulations on the China approval of ORZEYFUL. Could you clarify whether the approved label includes both the 1-milligram and 2-milligram tablet strengths? That is do the physicians in China have the flexibility to prescribe either dose? Or is the label focused on the 2-milligram BID regimen that was tested in Radiant Light? And a follow-up question, is the same strength profile reflected in the U.S. and Japan applications, please?

Christopher David O'Reilly: Thank you, Steve. So Andy, would you like to answer those questions, please?

Andrew Plump: Sure. So Steve, the label hasn't been released yet in China. And of course, we're still in the process of discussing the label in the U.S. and Japan. So we can't comment specifically what's on the label, but we can say that the expectation in China and the U.S., at least, we've not gotten to this point of discussions with Japan is that physicians will have access to multiple doses for patients.

Stephen Barker: Okay. Great. And if I can just follow up with a question about TAK-360. There's 2 aspects of what you presented today that caught my attention. So you are testing an NT1, which suggests that it has the potential to expand the market opportunity beyond ORZEYFUL. I was wondering if you could explain that. And then also the fact that you're evaluating both once daily and twice daily dosing, if you could explain that development choice as well, please?

Andrew Plump: So just quickly in the interest of time, Steve. So again, we're fully confident in ORZEYFUL and the profile that we've seen for ORZEYFUL. We think it's going to be a best-in-class agent for type 1 narcolepsy. We also recognize that we're really at the front end of understanding what orexin biology can do across a range of diseases, understanding dose, dose exposure and clinical response. And so with TAK-360, given that it's relatively early in development, our goal is to be as thoughtful as possible within a disease, testing as broader range of doses and dose regimens as well as across diseases to understand what the potential of that molecule is.

And once we have all those data, then we'll make decisions as to what doses we bring forward and what indications.

Christopher David O'Reilly: Thank you, Steve, for your questions. That brings our Q&A session to a close. And I'd like to now hand over to Julie for some closing remarks.

Julie Kim: So thank you, everyone, for joining us today and for your very thoughtful questions. I hope you are equally excited about our expected launches as we are. And I hope that many of you will join us later this year for our Capital Markets Day on December 11 here in Tokyo. I look forward to sharing our longer-term ambition with you and spending a bit more time on our strategic road map that will guide our growth through the end of the decade and beyond. So thank you again for your time, and have a wonderful rest of your day or evening. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]