Ladies and gentlemen, thank you for attending the conference on FY 2024 December financial results for Chugai Pharmaceutical. I am acting as a master of ceremony for today. My name is Miyata from the IR Department. We are holding this session in a hybrid manner. The agenda for today's presentation are shown on the presentation material page three as well as the screen in the venue. However, for those who are participating through Zoom webinar, you will be able to listen to the simultaneous translation [Technical Difficulty] the language of your choice by clicking the button at the bottom of your screen. For those who wish to listen to Japanese, please select Japanese. For those who wish to listen to English, please select English. After selecting your preferred language, please click on mute original audio. At the beginning of each session, we are going to pause for a while for those who [Technical Difficulty] to take a photo of the screen. We are going to take questions at the very end of the presentation. We allocate about 30 minutes for the Q&A session. Audio is muted during the presentation session. Now, Okuda will take you through a summary of the year 2024 and the outlook into 2025. We are going to pause for a while before the presentation of Okuda. So for those who wish to take a screen capture, please do so.

Now I'd like to start the presentation. I am Okuda, the President. I'll explain the summary of 2024 and the forecast for 2025. Please take a look at page four of the slides. The full-year results of 2024 exceeded the revised forecast for revenue, operating profit, and net income, with all figures reaching record highs. Revenue exceeded JPY1 trillion for the third consecutive year, and operating profit exceeded JPY500 billion for the first time. The operating margin also reached a record high of 47.5%. Regarding domestic sales, the completion of the JPY81.2 billion government supply of Ronapreve in 2023 had a significant impact. While overseas, especially exports of Hemlibra to Roche were particularly strong. In addition, other revenue increased mainly due to income related to Hemlibra and one-time income. Overseas and other revenue exceeded the decrease in domestic sales, and overall, the revenue increased. Compared to the revised forecast announced on October 25, domestic and overseas sales and revenue or income related to Hemlibra was strong. As a result, the full-year results for 2024 exceeded the upward revised forecast, thus achieving increased revenue and profit. Next, I will explain the forecast for 2025. We expect to achieve record high revenue and profit, mainly due to growth in overseas sales, with revenue of JPY1.190 trillion or plus 1.7% and core operating profit of JPY570 billion or plus 2.5%. At the same time, we expect to maintain a very high operating margin. On the next slide, I'll show you the trend in sales or revenue. Revenue is expected to increase by JPY19.4 billion or 1.7% in 2025, compared to 2024. Sales are expected to increase both in Japan and overseas. In Japan, the impact of NHI drug price revisions and the penetration of generics will be more than offset our growth in new products and main products, resulting in a slight increase of JPY1.4 billion. Overseas, the impact of the lower export unit price of Hemlibra will be more than offset by revenue growth due to volume growth and foreign exchange effects, resulting in an increase of JPY18.7 billion. On the other hand, other revenue is expected to decrease by JPY700 million, due to a decrease in one-time income and Actemra-related income, despite an increase in income related to Hemlibra. Next, I will report on the review and results of our key policies for 2024. First, I'll talk about the RED function for drug discovery and early development. In drug discovery, one project for mid-size molecules, which we are hoping will become our third pillar, has advanced to the preclinical development stage, and we have steadily established manufacturing technology for mid-size molecules. Antibody and small molecule projects have also progressed largely as planned. Next, early-stage development. We accumulated experience from our own pre-POC projects, and as our ability to predict human responses improved, we started advancing in phases and developing multiple projects. On the other hand, as a result of the Go/No-Go decision, we decided to discontinue the development of ERY974. The development of SPYK04 in-house was discontinued, and there were delays in some projects due to changes in the plan. In open innovation, we fully launched the Chugai Venture Fund and it made three investments. Regarding R&D projects, at the bottom of the slide, early-stage development of in-house products, NXT007, AMY109, advanced to Phase II last year. BRY10 began Phase I clinical trials, while GYM329 began Phase I trials for obesity and RAY121 began a basket trial for six autoimmune diseases. In addition, in the late-stage development, as you can see in the next slide, three of our in-house products, Alecensa, PiaSky, and NEMLUVIO, have achieved approvals, and including all these, 13 approvals and launches were made including global approvals and we are expanding our contribution to further treatment of patients. The number of projects in the pipeline, including Roche-licensed products is 21 in Phase I, six in Phase II, and 29 in Phase III; we continue to have abundant pipeline. In addition, there are four projects currently under regulatory review, and approvals are expected this year. Next, growth drivers. In Japan, although some products did not reach their targets due to the impact of competing products, PiaSky and Phesgo grew steadily and more than expected, and also exports of Hemlibra overseas also grew significantly. Finally, as for the business foundation, we have reviewed materiality in light of changes in the external environment, and we have been working to establish PHC solutions implementation system. Although there are issues with the development and acquisition of highly specialized human resources, the strengthening of our business foundation is progressing smoothly overall. The introduction of ASPIRE is an important companywide project, and as a result of our policy of making sufficient investments to ensure that there are no delays or problems, progress is on schedule, although the budget has been exceeded. Now, I will explain our management policy for 2025, which consists of three policies. First, with regard to RED capabilities enhancement and value creation, we will focus on building technology platform and project creation in addition to executing early judgments for the value of our own pre-POC projects based on the Go/No-Go criteria and accelerating the development of valuable projects. Next, maximizing the value of life cycle management projects. In addition to promoting the development of late-stage development projects and maximizing the value of new products and growth driver products, we will evolve our operating model toward an efficient and advanced business model. Finally, strengthening of the foundation. Under the new personnel HR system launched in January this year, we will strengthen our foundation through various measures, including our HR strategy, to achieve continuous innovation. Of these three major policies, we have identified four priority items that we will place emphasis on this year. The four are accelerating the maximization of DONQ52 value, strengthening of the hemophilia franchise, preparing for the launch and the proper use of Elevidys, and the proper operation of the new HR system. With regard to materiality, five years have passed since the initial establishment of the materiality, and in response to various changes in the environment, we have reviewed materiality last year. First, we organized and summarized materiality into 16 items, which are summarized under the three axis of challenges, co-creation, and commitments. In this new value creation model, we clarified that materiality is the starting point and that we will link it to specific outputs and the values provided through our business activities. Through this value creation model, Chugai Pharmaceutical aims to realize advanced, sustainable, patient-centric medical care that is a shared value between the Company and the society. This year marks the 100th anniversary of Chugai's founding. Since its foundation, Chugai has carried on the spirit of creating drugs that benefit the world. By continuously taking on the challenges of new drug discovery technologies from small and mid-size molecules, biologics, and antibodies and by establishing Chugai's unique technology-driven drug discovery approach, we've created innovative new drugs and contributed to solving unmet medical needs in a wide range of diseases. For the next 100 years to come, we will continue to expand our contribution to the global health care community and human health for the sake of the patients. In explaining our medium and long-term growth prospects, based on changes from before the start of TOP I 2030 to present, I would like to make some comments. Four years have passed since 2020, and the revenue structure has evolved dramatically. Please take a look at the graph to your left bottom. With regard to Roche products, biosimilar has penetrated, and we have seen decline in Avastin and mature products. New products launched after 2021, such as Polivy, Evrysdi, Vabysmo, and Phesgo, however, have offset such decline, and we continue to provide a stable revenue base. While our own products, mainly Hemlibra, have grown notably on a global basis. Looking ahead into the future from short to medium-term perspective, growth is expected to be driven by the three products that received global approval last year. In addition to this year will mark an important milestone for NXT007 and GYM329, as well as for the [Technical Difficulty] launches such as orforglipron. These will be our growth drivers in the medium and long-term. For Roche products, a number of products are in late-stage development, including Lunsumio and Elevidys, which will be approved and launched this year. On the other hand, there are factors contributing to lower sales. For example, [Indiscernible] price reduction in Japan and overseas, the impact of biosimilar on Actemra, and appreciation of the yen. Despite these factors, we will accelerate sustainable growth over the medium to long-term through the growth of our own products and continuous launches. Next, I would like to explain our basic policy on capital allocation. In our mission to contribute to the global healthcare through innovative medicines and services, we place highest priority on providing value to patients. At the same time, we consider stable shareholders' return to be also important. To achieve these goals, we carefully consider the balance between investment in growth to create shareholder value, including the creation and provision of innovative drugs and expansion of our value creation engine [Technical Difficulty] our drug discovery platform, and shareholder returns such as dividends to ensure optimal capital allocation. We are convinced that this policy will lead to our sustainable growth and enhance our corporate value, and we’ll continue to strive for a balance between providing value to patients and returns to shareholders. Next, I would like to explain about the dividend. Reflecting the good performance in 2024, we plan to pay a year-end dividend of JPY57 per share, JPY16 higher than the forecast at the beginning of the fiscal year. As a result, together with the interim dividend of JPY41 per share, the annual dividend will be JPY98 per share. For 2025, we forecast an annual dividend of JPY250 per share, consisting of an ordinary dividend of JPY100 per share and a commemorative dividend of JPY150 per share to celebrate our 100th anniversary to express our gratitude to our shareholders for their past support and understanding. We'll continue to strive to deliver innovation to patients around the world. We look forward to your continued support. This is the summary. And that's all from myself.

Next, I would like to invite Mr. Tanaka to talk about the development pipeline. At the outset, there will be some still moment where you can take advantage of your screen capture. Thank you. Over to you.

I would like to talk about the status of the development pipeline. I am Tanaka, Head of the R&D Portfolio Management Department. Please take a look at page 17. This is a summary of the topics for Q4. All approvals and applications have been already announced. First, we have nemolizumab or NEMLUVIO, which was out-licensed to Galderma. In the U.S., it received approval for additional indication for atopic dermatitis. In Europe, EMEA's CHMP issued a recommendation for approval for atopic dermatitis and prurigo nodularis. Lunsumio received approval for use third-line treatment of follicular lymphoma. Next, we have the applications. We have avutometinib, which we licensed out to Verastem Oncology. The application for accelerated approval in the U.S. for patients with recurrent low-grade serous ovarian cancer with KRAS mutations was accepted in December 2024. The target date for completion of the review is June 30, 2025. As for the start of the trials, we began a domestic Phase III study of Lunsumio for treatment of naive follicular lymphoma. As for the readout, the SKYSCRAPER-01 study of tiragolumab for first-line treatment of non-small cell lung cancer was discontinued. In addition to failure to meet primary endpoints of PFS, OS had not been met either. Next, I'll present the two-year data from the EMBARK study of delandistrogene moxeparvovec, the gene therapy for Duchenne muscular dystrophy. The study showed statistically significant and clinically meaningful results in the North Star Ambulatory Assessment, time to rise and 10-meter walk and run, compared to the pre-specified external control group. In addition, no new safety signals were observed, and it consistently demonstrated benefit. Other items removed from the pipeline are shown here. ERY974 had been undergoing Phase I trial for solid tumors and hepatocellular carcinoma, but we have decided to discontinue the trials based on comprehensive evaluation of efficacy and safety to-date. At medical conferences, we presented positive full-year data from the Phase II clinical trial of Lunsumio in patients with relapsed or refractory follicular lymphoma. Approximately 60% of patients, who achieved a complete response were alive and in sustained remission at month 45. In addition, we announced five-year data from the Phase III POLARIX study of Polivy in treatment naive diffuse large B-cell lymphoma. The data showed a favorable trend in OS in the ITT population, reinforcing the new standard treatment position. Enspryng received orphan drug designation for AIE and MOGAD. The review period is expected to be shortened. In the area of open innovation, we have made three investments through the Chugai Venture Fund, which began full-scale operation in Boston last year, and steady progress is being made. And as announced in the press release today, and what is not shown here in the slide, as far as AID351, GSK Global Health, the global health unit of GlaxoSmithKline in U.K., we had concluded a collaboration agreement with them to advance development of AID351. I'll explain the details later. And this is a summary of the major R&D events for 2024. Changes from the last time are underlined and in bold. Despite some setbacks, such as delays in trials and development discontinuations, we believe that the results were generally satisfactory. We're able to achieve important milestones with our in-house developed products such as Alecensa, which is one of our current growth drivers, and PiaSky, which we expect to be a future growth driver. And we have made steady progress toward a future leap forward. Next, I will explain the major events for 2025. For in-house developed products, we are expecting a readout for the Phase III trial for aHUS for PiaSky. Readouts for the Phase II trials for SMA, FSHD for GYM329 and hemophilia A, NXT007 are also planned. All of these are important milestones for determining whether to move on to Phase III trials or not. In addition, we plan to start a Phase II study of GYM329 for obesity by the end of this year. Next, I'll explain AID351, which was created at Chugai Pharmabody Research, CPR, our research subsidiary in Singapore. AID351 is an antibody drug for dengue fever, which is one of the neglected tropical diseases. As previously said, we have concluded a collaboration agreement with GSK Global Health to advance the development of this product. Under this agreement GSK will obtain a non-exclusive license to conduct activities aimed at initiating clinical trials of AID351. Dengue fever is a mosquito-borne fever that affects 400 million people approximately worldwide each year. When it becomes serious, it could be fatal and progress to dengue hemorrhagic fever or dengue shock syndrome, but there is still no established treatment for dengue fever. Every year, 500,000 patients worldwide become seriously ill and require hospitalization and treatment, and there is a high level of unmet medical needs. AID351 is an antibody that can bind to all four different types of dengue viruses that cause dengue fever. With support from Global Health Innovative Technology Fund, or GHIT Fund, the antibody was identified and optimized through collaboration between industry, government and academia in Singapore, including CPR, and is currently in the preclinical stage or it’s completed with the preclinical stage. The unique aspect of AID351 is that it is an antibody that combines both safety and efficacy as it avoids the phenomenon known as antibody-dependent enhancement of infection, which is one of the causes of severe dengue fever, by applying Chugai's proprietary antibody technology, while also retaining its ability to eliminate the virus. It is expected to be developed as a treatment for early relief of symptoms of dengue fever and as a prophylactic for medical professionals and others who are at the risk of contracting secondary infections during outbreaks or severe cases of the disease. Neglected tropical diseases have threatened the health and livelihoods of many people. But to-date, no effective treatments have been established. In order to fulfill our social responsibility in global health, we will work with GSK to develop innovative drugs to address this unmet medical needs. Regarding the five reforms of the TOP I 2030 growth strategy, I would like to explain about how to strengthen the Go/No-Go decision process, because this has been a frequently asked question. Chugai Pharmaceutical has been promoting science-based Go/No-Go decisions. And as a result, many of the projects have processed to the Phase III and been brought to the market. In the future, we will achieve both science and speed. We’ll continue to find the optimal development pathway for each project even in the non-clinical stage and evaluate the drug's potential in the shortest possible time. In addition to an increase in the number of projects, due to improved drug discovery capabilities, we are now able to see the potential of a drug earlier and more quickly, and we have improved human predictabilities, including a prediction of effective dose and safety profile. These efforts will enable us to maintain our high success rate of the Phase III, accelerate each project, and strategically allocate resources to ensure that we can continue to deliver the highest quality products to the market. As a result, we’ll be able to accelerate the launch cycle and make progress toward achieving TOP I 2030. More specifically, we'll accelerate the high potential projects and conduct early assessment to minimize development risk. For example, we'll promote efficient Phase I study design based on precise dosage production, simultaneous development for multiple in early-stage development, and accelerated evaluation of combination therapy. Six months have passed since the elaboration of this TOP I strategy, and we will apply this strategy to new projects to promote speed. We have also applied this strategy to projects that have already started its development. As explained in the review of the priority direction development of ERY974 was discontinued based on the clinical trial results, and we have stopped the in-house development of SPYK04, due to the results of the clinical trial. In 2025, we plan to make Go/No-Go decisions for more projects. We'll accelerate early development by making Go/No-Go decisions that combine science and speed and identify potential of drugs in the shortest possible time. This chart shows the market sales of major projects. Of the domestic sales, the orange in the upper row shows the sales of in-house products and the blue in the lower row shows the sales of Roche products. You see the overseas sales ratio of the in-house products. For domestic sales, the reasons for any changes from the previous disclosure are given in the right-hand column of the table. Of the overseas sales, Galderma expects NEMLUVIO to reach $1 billion per year by the end of 2027, and after that, peak sales are expected to exceed $2 billion. And after that which peak sales will exceed $2 billion -- excuse me dollars. And this slide shows the status of the portfolio for each modality. We continue to have an abundance of in-house projects, all of which are progressing well. In the third pillar of our focus mid-size molecules, two projects are in the preclinical phase and 26 other projects are in the drug discovery phase. As a reference material, we have included a detailed status of low molecular drugs, mid molecular medicine and antibody drugs, and cellular and genetic therapy medicines. Please refer to them as necessary. Here is a schedule for future filings. The blue star represents newly added projects. The slides which follow this page are attached as appendix. And this is the end of my presentation.

Thank you very much for your attention. Now moving on to Taniguchi, talking about the full-year results of 2024 on a consolidated basis. There will be some still moments, so if you wish to make a screen capture. Please take advantage of this moment.

Well, Taniguchi CFO. Thank you very much. I will now explain the full-year results for 2024. These will be all shown in core basis as compared to the previous year, mainly. First of all, 2024 revenue. Revenue increased by JPY59.2 billion or 5.3% year-on-year to JPY1,170.6 billion. Operating profit increased by 23.4% to JPY556.1 billion. That is the first message that I'd like to convey. And the, let me go into the details of revenue. The main reason for this increase in revenue was a significant increase in export sales of products such as Hemlibra overseas. The sales growth completely absorbed the impact of the loss of sales of Ronapreve, a COVID-19 drug to the Japanese government, was JPY81.2 billion and actually exceeded it. Looking at the breakdown of revenue, first of all, the sales were JPY997.9 billion, an increase of JPY23.4 billion or 2.4%. If you look at the sales by domestic sales and overseas sales, domestic sales decreased by JPY96.9 billion year-on-year or 17.4% to JPY461.1billion. As I said, for Ronapreve, the JPY81.2 billion that was posted last year is now gone, but decrease would be JPY15.7 billion, excluding Ronapreve. And the main factors were the impact of NHI drug price revisions and penetration of generic products. In overseas, export products such as Hemlibra were strong and sales grew by JPY120.3 billion or 28.9% and also other revenue, including royalty income and one-time income, actually increased mainly because of Hemlibra income. It was JPY172.7 billion or an increase of JPY35.8 billion or 26.2%. Next, I'd like to move to the cost items. Cost of sales decreased to JPY338.1 billion year-on-year by JPY73.9 billion of 17.9%. So sales increased, but the cost of sales decreased. Why? The reason is that cost of Ronapreve, which had a high cost of sales ratio, has disappeared, and relatively low cost of sales ratio of in-house products has increased in the sales mix. So relative increase and changes in the product mix actually reduced the cost of sales. And the cost of sales ratio has improved by 8.4 points to 33.9%. And regarding R&D expenses, due to the steady progress of projects in the drug discovery research and early stage development, it increased by JPY14.1 billion year-on-year. And SG&A expenses, despite the impact of rising prices and personnel costs, we made efforts to improve efficiency, and the increase was limited to just JPY200 million year-on-year. Now, other revenue decreased by JPY13.4 billion year-on-year to JPY2.7 billion due to the significant decrease in gains on sales of products transferred in 2024 because that was posted in large amounts last year. As a result of these factors, operating profit increased to JPY556.1 billion or an increase of JPY105.4 billion or 23.4%, and operating margin increased to 47.5% or a 7.0 point increase. And if you decrease the net income was JPY397.1 billion, increase of JPY63.5 billion or 19.0% year-on-year. EPS was JPY241, a JPY38.6 increase year-on-year. And let me go into the breakdown of changes in sale products. First of all, this is the year-on-year comparison. So there are oncology and specialty business units in Japan. As for oncology, the sales decreased by 4.8% or JPY12.5 billion. Sales of Avastin decreased due to the impact of penetration of generic products JPY16 billion. And the sales of new product Phesgo increased by JPY22.8 billion. The Perjeta and Herceptin declined that comprises if the Phesgo is a combination but it offset by that. And specialty sales decreased by JPY84.4 billion. Ronapreve, JPY82.1 billion. For Tamiflu, from around December last year, influenza being an outbreak, but in 2023, the previous year, there was much more outbreak. Because of that impact of Ronapreve and Tamiflu, it declined, but actually without that, a JPY2.2 billion increase would have been achieved. There was a revision of NHI drug price, but Vabysmo and PiaSky are steadily increasing as the new products. Overseas sales, JPY120.3 billion increase. It was because Hemlibra and four main products increased. JPY10.4 billion increase and Alecensa and Actemra they has reached a lot. Actually avoided the penetration of biosimilar, which was delayed. The next page shows the breakdown of increase in operating profit, JPY450.7 billion to JPY556.1 billion. There's a change. There was an impact of NHI drug price revisions, but Ronapreve were the main factors. But on the other hand, there was an increase of JPY120.3 billion in overseas sales. Hemlibra, the more sales in emerging countries, the price would be lower. There is also positive impact of increase in volume and the positive impact of foreign exchange rate from 2023 to 2024, a JPY69.9 billion impact, was seen. And other revenue, the royalty income increased and Hemlibra is the main one, but there are others. Roche local sales increased, and that has increased the royalty income. In expenses, the JPY73.9 billion in cost of sales declined but there were R&D expenses increased slightly. So overall, a JPY105.4 billion increase was achieved. The following page shows the trend in profit and loss items for [Indiscernible] from the first quarter 2022. So by quarter, there are timing changes in export shipment. But the quarter three, operating profit was quite high, as you can see. Compared to a comparison in the fourth quarter in 2024 and 2023, JPY19.4 billion increase was achieved in operating profit. But I will explain in more detail on the next page. But in terms of quarter four to quarter four, in other revenue, between 2023 and 2024, JPY13 billion increase was achieved. But this is a revenue mix. As you can see, the second quarter and third quarter have seen relatively larger sales, as compared to the other quarters. Next, 2024 actual results. As I explained, the revised forecast at the time of earnings results for Q3, JPY80.0 billion was the upward revision for both revenue and profit, JPY20.6 billion in sales, and JPY16.1 billion profit ahead of those revised forecast. JPY7 billion in sales in the domestic market, that was achieved because of the strong sales after the third quarter. So JPY7 billion in domestic sales and JPY4.9 billion in overseas. As for royalty income, the fourth quarter Roche's sales overseas were ahead of the sales -- of the expectations, so Hemlibra income increased, but cost of sales and expenses were mostly as expected. So JPY16.1 billion increase. And so in the third quarter the guidance was changed. Compared to that, what was the actual results, a JPY7 billion increase in domestic sales; specialty, JPY5.3 billion. This includes Hemlibra, Tamiflu, and Vabysmo. In oncology, Phesgo also grew. Hemlibra overseas grew JPY3.7 billion. This shows the FX impact. In 2023 actual rate is shown and then, in terms of revenue, JPY91 billion positive. And OPbased, we've had a positive impact due to FX rate of JPY76.4 billion. And exchange rate against the Swiss Franc, we have seen JPY1 [Technical Difficulty] depreciation of yen. Next is the balance sheet, as of the end of 2024 [Technical Difficulty]. Due to the increase of sales, our working capital increased. And we made capital investments, and net cash went up JPY257 billion and total asset was JPY2,208.4 billion, and liability remains almost the same, and the net asset has grown up to JPY1,901.5 billion, and at the end of… The net cash increased up to JPY996.1 billion. Operating free cash flow was plus JPY493.4 billion, reflecting our performance. And we did that to corporate tax and dividend payment and so on, we have seen an increase in cash. Acquisition of tangible fixed asset of JPY50.4 billion was also recognized. Capital efficiency is quite important, this is a change of ROIC. From 2023, ROIC increased by more than 8% point. This is exceeding 7% threshold. This is the forecast for this fiscal year, which was already explained by Okuda, so I would like to skip the details. But the revenue is expected to grew by 1.7%, which is JPY19.4 billion. For domestic we have an impact of generic entry and NHI price increase. However due to the product increase, we are making -- we are going to make increase and grow. Obviously, the Hemlibra is expected to grow and [Indiscernible] is also expected to grow. Actemra is impacted by the biosimilar entry so we expect some drop. And cost, R&D, SG&A development fee cost were SG&A and R&D cost mostly are expected to stay flat. So OP is expected to be JPY570 billion. The OP is expected to grow 2.5%, and net income is expected to be JPY410 billion. And this is the comparison against the actual of 2024. Domestic, plus JPY1.4 billion. On Oncology, we still see some impact by generics on Avastin, and Polivy is also expected to grow. Specialty product is expected to grow by JPY9.9 billion. Expected [Indiscernible] Vabysmo, PiaSky, and [Technical Difficulty] Hemlibra. Other sales of overseas are expected to grow as well. Finally, this is an appendix, that you see IFRS-based financial numbers. JPY7.9 billion business restructuring costs include [Indiscernible] implementation. And intangible asset wise we have inline [Technical Difficulty] technology, so we need to incur depreciation. The next page shows the major investment and [Technical Difficulty]. The major CapEx approved by the executive meeting are shown here. Now we have added PiaSky that this is the status of our in-house global products. This shows the actual performance and Roche local sales, and export sales. That's all from myself. Thank you very much for listening.

Now, I would like to move to question-and-answer session. In Q&A, there will be two more people to answer questions

Hidaka, the Vice President of Supervisory Responsibility for Marketing and Sales, and Digital Transformation Unit Head, Suzuki. And there is a three joint releases by three companies, our company, SoftBank, and SoftBank Intuitions, today. In order to have as many people as possible asking questions, please let us limit the questions to two per person. And also, the presentation as well as the question-and-answer session will be posted on to the website on the later date of our company. We'd like to take questions from the people in person in the venue, and then take questions from those who are participating on Zoom webinar. Now if you have any questions, if you are in the room, please raise your hands. The microphone will be brought to you. Please identify yourself and your affiliation first before asking questions. The person in the first row please, the microphone will be brought to you.

Hashiguchi from Daiwa Securities. The first question is about pipeline. This year, the priority items include DONQ Phase II initiation and NXT Phase III initiation preparation. And also, in the presentations, you said that GYM329 Phase II for obesity will be initiated. Of those for each, to what extent you have made-- you have seen the decisions made for initiation? The previous phase, which must be the reason for the next phase initiation, has not been disclosed. But as far as you see, to what extent do you have the confidence of being able to initiate actually? Ans also is it also part of your wishful thinking? And also, compared to the previous year, you said that you are going to accelerate your development. So those -- you have not decided yet whether to be able to start the next phase. You may also start preparation for the following phase. Is that what is included for each of those? Can you answer that question?

Thank you for the questions. DONQ, NXT, and GYM, I think those are the three in-house original developed product milestones that are expected. And has it already been fully decided? Or is it just the preparation, because of acceleration of development? Well, DONQ52 Phase II initiation, well at the moment, we are conducting Phase I study and data is coming out. And based on the data, we would do the interpretation and then move on to Phase II. These are the usual steps. So in terms of timing, we can start preparation for Phase II. As we do so, we can expect the Phase I data to come out. As for NXT007, Phase I/II is also being conducted and the result will come out, and we are at the timing of being able to move to the next phase. So the second part of your question, in order to accelerate the speed, you're assuming that the result will be positive. We are starting the preparation, as you have guessed. We're not saying that we know the result, but based on the result that will come out, we would make decisions for the next one. GYM329, what about Phase II for obesity? Phase I was done in last year. So with regard to Phase II, the combination study is going to be started.

Thank you. The next question is about the dividend. JPY250 includes JPY150 commemorative dividend for this year. If you can look at the other companies, the commemorative dividend is used for increase in dividend. But usually, the following year, the comparable dividend will be paid even though there is no commemorative dividend so that there will be no decline in the dividend received. When you increase the dividend, you say this is under all species of cumulative dividend, but actually, you would increase further in the following year. So when you look at the cash flow forecast from your company, the JPY250 dividend per share is really an unusual level of dividend, because of this 100th anniversary or do you think that it's highly probable that you can continue to maintain this level years after that?

Let me explain. This commemorative dividend, in total, JPY250, but JPY150 out of that is an commemorative dividend. The ordinary dividend is JPY100. So if you can distinguish that, that will be appreciated. To celebrate the 100th year and thank for the support and cooperation from the shareholders, we are paying JPY150, and then ordinary dividend will be JPY100. [Technical Difficulty] and we are going to pay stable dividend, which is about ordinary dividend. If there is additional comment from the CFO?

No nothing more. But actually, we're not familiar with the other companies' practice, but we do make distinction between these two. But we look at the current financial position. We have made this decision. So we are not able to talk about the future. So 45% payout ratio for ordinary dividend, but other than that, we're not in a position to comment on any other part. Thank you.

Please raise your hand if you have any questions.

Hi, I am from UBS Securities, Sakai. You are now trying to accelerate drug development. This has been your challenge in the past one or two decades. When I look at page 23 and when I look at your news release regarding the collaboration with SoftBank SB Intuitions, I wonder what is the realistic probability of you accelerating the drug development speed? At the same time, I think you are contemplating whether Japanese subjects in Phase I is really necessary. In that case, what will be the expected impact? And is it really viable or not? Can you please comment on the feasibility of this project or impact of this project? Like by when are we able to start seeing the tangible result of this project?

In terms of the acceleration of our development process or enhancement of the Go/No-Go decision, what Tanaka will answer that. With regard to the collaboration with SoftBank, I would like to ask Suzuki to respond to your question. And if I have any additional comments, I would like to cut in.

Well, thank you very much for your question. I am Tanaka speaking. The Go/No-Go decision enhancement, how do we apply our strategy to do so? Existing projects and future new projects who are entering in the clinical development phase, for all of those projects, we are going to apply this strategy. And some of the project, we have already started early assessment of efficacy, and we have already started efforts to simultaneous development for multiple number of therapeutic areas. The science-based project decision, what kind of development pathway is most suitable to what kind of project? It's been 10-years since the establishment of translational research division, so we have accumulated know-how from the past clinical research activities. So based on such, setting up the most optimum timeline for development activities have been now realized. So we would like to continue doing so.

As to your question, what is the timeline in order for us to see the tangible result? Well as Tanaka mentioned, these criteria has already been applied to the existing projects, and this strategy will also apply to the newly added projects. As we work on more number of projects, we should be able to see more tangible results. And to your second question in relation to the collaboration with SoftBank, Suzuki would like to respond.

Thank you for your question. I am from the Digital Transformation Unit. My name is Suzuki. The collaboration with SoftBank and SB Intuitions, with regard to the basic agreement for the partnership with both companies, I would like to make some comment. How can we shorten the development timeline through this collaboration? Well, when I look at the report issued by METI, by utilizing gen AI, we may be able to shorten the timeline by four years in general. And this year, we are focusing on the clinical development operations to further optimize. We will start the study and see what will the probable impact.

Mr. Sakai, I think you asked one more question, which is regarding the necessity of Japanese subjects to be involved in the Phase I study. As Tanaka explained about the Chugai Pharmaceutical original product, no impact. So when it comes to the licensed in-product from Roche, ultimately speaking, we may be able to skip Phase I with the Japanese population but it's project-by-project, and we need to consult with the authority to see if Japanese Phase I is really necessary or can be skipped.

My next question, I think it goes to Taniguchi-san. In first quarter, the royalty and profit sharing number amount increased quite a bit. I'm sure you will say, sorry, we can't comment on that. But indeed, it has gone up. Why? I think it's due to Hemlibra. But in the Roche earnings, they didn't talk a lot about Hemlibra, they didn’t disclose a lot of numbers for Hemlibra. So I would like to ask Taniguchi-san to explain about [Technical Difficulty]. Is there any change in the rate? Or has there been any change in the threshold? Like the global price should have come down, right? So but still, this number is quite big.

The Roche is holding a conference this evening, but January to December numbers are already available. If you look at the delta as of the end of Q3 and Q4, you should be able to analyze for Hemlibra. But Q4 was better than our expectation. Again, I cannot comment on a specific product. But this is Roche external sales basically, which performed strongly. It's not like we have changed the contract. It's a tiered royalty. So when the number exceeds a certain threshold, the rate will go up, but I can't comment any further on that. But when the volume grows and even at the same percentage, royalties can grow. Thank you.

Thank you.

Thank you very much. If you have any questions, please raise your hand, for those of you who are in the room in person. No more questions? Then, let’s move to the participants through Zoom webinar. If you’re use PC and tablet PC to participate, please click on the raise-hand function at the bottom of the screen. If your turn is here, then your name will be called and the secretariat will ask you to unmute yourself. Please identify yourself and your affiliation before asking questions. [Operator Instructions] From JPMorgan, Mr. Wakao, please ask your question.

Wakao from JPMorgan. Can you hear me.

Yes.

The first question, the changes from third for the forecast for this year, at the time of third quarter, there's a forecast, but there have been changes. At the time of third quarter, for this year's forecast, JPY540 billion is the previous one. And you said that this is going to be flat, but JPY570 billion for core operating profit guidance. So there is a JPY30 billion increase. So I'd like to know about this change from the third quarter. If you look at the Roche earnings, Hemlibra and Actemra and sales final end sales has been. Maybe this has be reflected, am I right? If that is correct, then Hemlibra and Actemra, what sort of level that you're looking at in this year?

Thank you very much. Taniguchi speaking. At the time of third quarter, yes, we said JPY540 billion or around that. That's what Okuda said, and we officially announce JPY570 billion. So basically, very strong is the export sales. So it has been stronger than we had expected. Actemra, Hemlibra, are starting from Actemra, entry of biosimilar, how do you look at that? Well, from October last year, so in our view, of course, our export and local sales from Roche are not exactly consistent, but the inventory is in short supply. So maybe there will be more in export. But as for Hemlibra, there is a very strong number, especially international sales. There could be some room for upside. Does that answer your question?

Thank you. As for Hemlibra, a follow-up question. Up to third quarter, international was about inventory buildup. That was the reason for international sales increase. So we had thought that in fourth quarter the sales could be flat. That's what the equity market expected, but actually, it is going to increase this year. Is it only for international? Or would it be also seen in the U.S.? I'd like to know by country breakdown. And also peak sales that you have shared with us, do you have room for growth for Hemlibra? So can we expect an increase in export sales for Hemlibra as well?

Well for this year, I can't go into details. There may be some misunderstanding that there is buildup of inventory behind the international sales. Up to third quarter, according to the disclosure of Roche, I think, in terms of actual sales, it has been increasing. So there is a pure net increase that we can expect. But it doesn't mean that the international sales are weaker. So continuously, there will be some growth in the U.S. especially, and that has led our export sales as well. And from next year onward, it's too early to tell, so because we have to look at the competitive environment and to make comprehensive decisions. So I'd like to refrain from commenting further.

Thank you. The second question, there are several Go/No-Go decisions to be made for several items. So what would be specifically the ones that you're looking at? In the document, for example, in slide 32, so in antibodies, there are several projects. And of those antibodies, those that are in the clinical studies, which and those -- are they subject to Go/NoGo decision? And LUNA18, what is the status? And DONQ, from early last year, I think you are engaged in out-licensing activities, but now you're more focused on in-house development. So from the out-licensing activities perspective, have they encountered some challenges? So with the data that you have, you may not be able to do out-licensing as you had expected, and that's why you are more focused on in-house products. Is that true?

Well, I'd like to answer the question on DONQ, and which one is subject to Go/No-Go decisions, Well, Tanaka will answer the question. As for DONQ, as I explained earlier, Phase I clinical trial is underway. In parallel, out-licensing partners are being looked for, and that has been done since last year. So as we look for potential partners, what we've decided is that we, on our own, can conduct a Phase II study to maximize DONQ52 value. So -- and also as we -- by -- us actually conducting the Phase II trial, we can accumulate our insights and experiences. So those are the two reasons why we have decided to conduct Phase II study on our own. For the second question, Tanaka will answer which one of those projects will be subject to Go/No-Go decision this year.

Tanaka speaking. So I was asked to answer this question, but at this moment, we're not in a position to comment on which one will be subject to Go/No-Go decision. Well, as for LUNA18, for the combination dose escalation study and the monotherapy study is underway. And we are not in a position to talk about any progress or results. I'd like to refrain from answering that.

From 2025, whether you can achieve ePoC or not, I think that was the target, but this is not part of the milestone for this year. So I would understand that there is not going to be any changes in particular this year?

Well at this moment, we would like to refrain from answering that question.

Thank you.

Next question is from Mr. Yamaguchi from Citigroup Securities, please.

Can you hear me. Thank you. My first question is related to NXT007 Phase II. What is the timing of that top line readout? I think there are some major academic society meetings, such as World Hemophilia. Will you be able to make some presentation based on the Phase II result of NXT007. So I would like to understand when you are planning to present the result of Phase II for NXT007?

At this point of time, I cannot comment on the timing of the presentation of Phase II study.

But I think you are confident in this profile. This has a potential to do better than Hemlibra, right? As a project anti-calculation. Should be able to achieve the non-hemophilia level and is the [Technical Difficulty] that which remains unchanged? And the second question, sorry go ahead.

In the Phase I study, we were able to confirm long half-life, which is 10-weeks.

My second question is related to the Go/No-Go decision, which has been the focus of today's session. For mid-size molecule, it seems like it's taking longer than expected. Not just LUNA18, but should we expect some impact as a result of Go/No-Go decision on mid-size molecule?

Thank you for your question. Tanaka would like to respond. We apply a Go/No-Go decision on mid-size molecule? Well basically, for any project, we are going to apply this Go/No-Go decision approach.

So mid-size molecules are also included and you should be able to accelerate the speed of the development for mid-size molecule.

Yes. Enhancement of the speed is the goal of science-based Go/No-Go decision.

So, yes that’s all from me. Thank you.

This is Taniguchi speaking. For NXT007, I think you kind of asked for the peak sales of NXT007. If you look at page 12, it says over CHF3 billion. That's the category we are referring to.

Is this over CHF3 billion? Or are we are saying over CHF3 billion?

Bo more than CHF3 billion. Yes.

Thank you. That's all from me.

Next, Jefferies Securities, Barker-san, please.

Hi, Stephen Barker. For the forecast for this year and revenue and profit forecast, NEMLUVIO export and royalty income, how much have you incorporated in this year's forecast?

Well Taniguchi speaking. Thank you for the question. As for NEMLUVIO, it has not reached the threshold yet so it is a part of the Others in the disclosure. And if you look at the bata book there are items like others, the overseas sales is Others and that is what NEMLUVIO. But how much of that is NEMLUVIO is not disclosed. And the breakdown information is not subject to disclosure. But the sales in others from this year to next year, there will be more than doubling of increase. And a majority of that is from NEMLUVIO.

Thank you. Then, other revenue and royalty income, Hemlibra was the main reason, as you said. But for this year, export to Hemlibra, if you look at the value, there is not much increase in royalty income increase.

Well, the Other revenue of JPY172.7 billion is last year. Not much change, but actually, mix has changed. I can't disclose that, but there are products that are slowing down. But there's also one-time income that is included. So there's some increase and decrease. So we cannot talk about which product is growing and which product is slowing down.

So Enspryng overseas sales for this year -- local sales will be the one.

Well in terms of Enspryng, the sales scale is smaller compared to Hemlibra and Actemra, much smaller. And the timing of shipment and export is not happening like every month or every two months, not regularly. So because of the timing of shipment and exports, there were some changes and fluctuations in numbers in the past, but this is also what is happening in this year.

Thank you.

Thank you very much. Next is from Macquarie Capital, Tony Ren, please.

Hello. Can you hear me. Okay, perfect, yes, so just a couple from me. So you guys alluded to that, in 2025, in terms of exports of Hemlibra to Roche, there will be a unit price reduction. I just want to get some understanding of the magnitude of the unit price reduction here. So if I look at slide 53, you can see that there is a column called year-on-year column. The Hemlibra export appears to be growing at 44.9%. But if you look at the revenue forecast of JPY324.2 billion, that's about a 5% increase. So would it be correct to assume that there will be roughly a 39%, 40% average price reduction on Hemlibra sold to Roche? This feels quite large of price reduction. So that's my first question. The second question, you guys alluded to a few times that GYM329, you will start a combination study in obesity. I just want to see if you have any thinking about what the combination partner. Would that be one of the incretins GLP-1s from Roche and Carmot Therapeutics? Yes, thank you.

Thank you for your question. Taniguchi will respond to your first question. With regard to Hemlibra, from ‘23 to ‘24, it has grown by 44.9%, and from ‘24 to ‘25, we are not expecting that much growth. Like 5.4% revenue growth we are expecting from ‘24 to ‘25. Volume and FX will effect on top of the unit price. The detailed breakdown is not disclosed. Unit price comes down, that’s because the percentage of emerging markets will grow, then unit price will come down. However, for emerging market, volume will grow. So plus/minus net-net, for this fiscal year, we are still expecting a positive growth. The magnitude of the decline of unit price, in terms of that, we are not expecting a big decline of unit price.

And for the GYM329 obesity combination study, what is the combination drug? That's your question. At this point of time, we haven't decided on that, but incretin is one option we are looking into as a combination drug.

Okay. Thank you very much on both. If I could just talk on one more. So you guys alluded to last time that the biosimilar Actemra had some supply chain issues. Now that the whole GLP-1 supply chain issue, particularly with Eli Lilly’s tirzepatide, has been resolved, do you have any update on your biosimilar Actemra competitors? Has their supply chain issue been resolved?

Are you talking about Actemra biosimilar.

Correct.

Well, we cannot make a comment on the situation of the other company. But Actemra biosimilar, on top of the supply chain issue, there are other factors such as the price of biosimilars and other composite factors are affected. And also, in some of the market, Actemra, which is the branded product, are preferred by rheumatologists. In 2024, the entry of the biosimilar was slower than our expectation. And for 2025, what will be the speed of the entry? I cannot make any comment. But if you look at our sales forecast, we are setting up a somewhat conservative forecast for 2025, anticipating some entry of biosimilars in 2025.

Okay, understood. Very good. Thank you.

Morgan Stanley MUFG Securities, Mr. Muraoka, please.

Thank you very much. Morgan Stanley, Muraoka. Can you hear me.

Yes.

Thank you. Now I'd like to ask about DONQ. Just for clarification, you were looking for partners, but in order to increase value, you are going to conduct Phase II on your own. That's how I understood. So PoC Phase Ic based on the results of PoC Phase Ic and you showed the results to potential partners and you decided that you will not be able to find any partners or on the other hand you actually thought that there will be more interesting for you to take this up on your own.

Well, Okuda speaking. Thank you for the question. We're still conducting Phase I, that is underway. And also, as for those strategic issues, we would like to refrain from answer the -- commenting.

Thank you. In the Roche pipeline, DONQ is part of that. So Roche is just showing this as information from its subsidiary?

Yes, that is correct. There is no fact that we have licensed out DONQ to Roche.

Thank you. Now the second question. The first quarter that we are now in, how you look at that? The first quarter that was over. On a quarter-on-quarter basis, well because of the third quarter on a quarter-to-quarter basis, those numbers were dropped. But January to March, there could be some reactionary effect. And also, first quarter one year before versus had a slow start. So, this first quarter, you are making a steady start. Even though the things are seem to be flat. Well I think that probability of hearing that result at the end of the first quarter is high. Would that be correct.

Well, January this is today. So it’s been only one month so we don't know what is going to happen for the remaining two months. It's very difficult to figure out. And so in terms of level of probability or confidence, I would like to refrain from commenting on that.

Well, the way I put the question was wrong. Well, including the remaining two months, is there anything that you can expect, like changes in inventory or some one-time factors, that could be something that we should be mindful of, either positive or negative factors within the information that can be disclosed?

Nothing in particular.

Okay. Thank you.

Sogi-san can you hear me. Yes, please. Your channel to Japanese. Hi, you are in the right channel right now. I have switched to Japanese like.

Thank you. I have a couple of questions. First of all, page six, obviously from this year to next year, what is going to be the change. And when I look at the overseas sales export unit price, sales volume impact are shown. The balance seems different from the past. So price reduction impact for export, net price seems to be high. So my first question is that the impact coming over from Hemlibra in terms of export unit price and sales volume? And with Hemlibra, international market volume seems growing, but in terms of the overall sales, amongst the sales of Hemlibra, majority of them coming from the U.S. and Europe. So at the end of the day, unit price impact I would be assume to be limited, although there might be some price lowering pressure. But I'm surprised to see this price impact. Export unit price within your scheme of defining export unit price? Is there any -- is that sales volume will exceed the impact of export unit price?

Taniguchi would respond to this question. This is not only driven by Hemlibra. Percentage contribution of Hemlibra is high, but when you look at the international market, Roche itself has Actemra, which is growing. Alecensa is also growing. All of these are contributing. As long as we have international exposure, this unit price will give us some impact and we have a contract per product, and I cannot comment or disclose the contract for specific products, but it's not like it's internally fixed. It's a contract between two parties. As long as the two parties agree, if necessary, we can make amendments or changes. But for the specifics, I cannot comment. The size of this arrow doesn't really have big significance. I know some people measure that the size of this arrow, but it's not really a meaningful thing to do.

From ‘23 to ‘24, compared to the change between those two years, it seems like ‘24 to ‘25, the size of the change is bigger now.

Yes.

And with regard to the product development strategy. You have a valid product -- drug development strategy. What kind of KPIs do you follow to see that your strategy is functioning well or not?

This is Tanaka speaking. I would like to confirm your question. Are you talking about a Go/No-Go decision KPI?

So you are going to promote Go/No-Go decision. You are going to speed up the right decision-making process. And I was wondering how you measure the effectiveness or success of such Go/No-Go decision. Is there any KPI? Thank you.

With regard to the Go/No-Go decision, it's not like we have set forth clear KPIs. We don't have such KPIs. But when Go/No-Go decisions are thoroughly executed, our development cycle should see faster speed.

So the decision on discontinuation of the project can happen earlier.

No, we don't have a specific KPI for that.

Understood. Thank you.

Thank you very much. With that, we would like to conclude the Chugai Pharmaceutical earnings briefing on the year ending December 2024. Those questions that were left unanswered, please contact Public Relations and IR on a separate basis. There is contact information at the end of the presentation slide in terms of telephone number and email address. Thank you very much for your presence, despite your busy schedule today. That concludes our meeting. Thank you.