Astellas Pharma Inc. (4503) Earnings Call Transcript & Summary

[Interpreted] Yes. Good afternoon. I'm Yasukawa. Despite your busy schedule toward the end of the year, thank you very much for joining our R&D Meeting. The topic, as was mentioned, is the progress of the focus area approach. Recently, we received questions that 2027 and beyond, the Astellas' strategy is not well known. So please explain that. And also, the 6 -- or the [ 7 ] inclusive of [ 83 72 ], we really do not know those products beyond those [ 7 ]. So to answer those questions, we would talk about the primary focus approach. Therefore, our primary focus lead has prepared the meeting -- prepared the presentations to this end. And also the value of our pipeline and also the value of the technology platform that support our value, that should be recognized by all the stakeholders. So through this, we have the opportunities to collaborate with the academia, other companies and also by combining our strengths, we'll be able to reach the win-win situation for the partners. So in that sense, the Slide 2, primary focus and primary focus candidates would be focused in this meeting. Please participate. And also, toward the end, we have the Q&A session. Of course, you can ask any question. However, the last year of our midterm plan and those questions that we would receive is the next CSP and also what is our plan -- revenue plan. But since we haven't yet made any decision, therefore, please wait for the announcement after the decisions are made in March at the Executive Committee and also the Board of Directors meeting. If we take those questions today, that will not cover the relevant questions that should be on the primary focus strategies. So we would like you to focus on those questions related to those primary focus program. Then shall we go into the sessions? First is the genetic regulation. Ulf-san, if you're ready, please make your presentation.

Thank you. Just a sound check first to see if you can hear me.

We can hear you.

All right. So let me start by saying good morning, good afternoon and good evening. My name is Ulf Tollemar, and I'm the Primary Focus Lead for primary focus: genetic regulation. Today, it is my pleasure to present our aspirations, goals and progress for my primary focus, genetic regulation, and to show how our activities and investments support not only my primary focus, but also other ventures in Astellas. Can we go to next slide, please? We are very excited about the disruptive potential of genetic regulation medicines. A single intervention can correct a genetic deficiency and provide durable value to patients. What we want to do is to deliver life-changing and transformative therapies to patients with genetic diseases. These are patients often with serious life-threatening diseases without treatment options. There are close to 7,000 known genetic diseases as potential targets for genetic regulation medicines. Next slide, please. This is interesting, but it is different and it requires new capabilities. Earlier this year, we took a giant leap building the required capabilities with the acquisition of Audentes. With this acquisition, we dramatically improved our capabilities. In particular, we got access to manufacturing capabilities, a pipeline of projects and a creative operation skilled in bringing genetic regulation medicines to patients with passion and urgency. Next slide, please. Strategically then, we are building a new multidisciplinary franchise, investing in world-class end-to-end capabilities across the entire gene therapy innovation process. With Audentes, we are confident to aim for leadership. We want to [indiscernible] genetic regulation medicine with Audentes as our center of excellence. What this means is that we will invest to build a strong center of excellence infrastructure for sustained growth. We will build a robust research capability focused on next-generation technologies to build our pipeline. We will further enhance our manufacturing capabilities to efficiently support the pipeline, and we will integrate our pipeline to develop transformative therapies and bring value to patients and to do that with urgency. In the next few slides, I will provide a bit more detail. So let's go to the next slide, please. AAV manufacturing is not the same as manufacturing of small molecules. It is more complicated and it is more costly. And the overall capacity is a significant bottleneck for the industry. We are investing in AAV manufacturing as a key strategic capability for use across Astellas, not just for primary focus, genetic regulation. We want to control the supply chain and become self-sufficient for AAV manufacturing for research use as well as for commercial supply. The current manufacturing site is located in South San Francisco. This site has over 4 years of production experience, currently can manufacture a 1,000-liter scale GMP material, with preparation ongoing for commercial supply. We are investing in process development and plasmid manufacturing to move towards improving manufacturing efficiency and controlling the supply chain and development time line. In addition, we are investing in a second larger manufacturing site in Sanford, North Carolina. This site is under construction with plans to become operational in mid-2022. This site will significantly expand our capacity with further expansion possible in the future. As I said, the utility of these investments and capabilities expand beyond my primary focus. The center of excellence is supporting all AAV manufacturing across Astellas. And I believe that in the next presentation on primary focus, blindness and regeneration, you will see how other areas will benefit. Next slide, please. So it is a rapid development of technologies that has enabled gene therapy. It is now possible to deliver a missing gene into a specific cell nucleus and have that gene expressed for extended periods, and it can be done safely. At the center of excellence, we are currently focused on gene replacement and gene regulation using AAV viruses, specifically on the AAV8 serotype as the modality for delivery. These open up opportunities to treat many diseases. Currently, we have a strong focus on serious rare neuromuscular diseases, like XLMTM, Pompe disease, Duchenne muscular dystrophy and myotonic dystrophy type 1. Looking forward, we are constantly searching for new and even better technologies to transform the lives of patients not amenable to treatment today. We believe innovations will continue and that breakthrough science will improve safety, cost and efficiencies to allow gene therapy to tackle many more diseases, even more common diseases in the future. Growth of our pipeline we expect to be linked with access to these new novel technologies. Next slide, please. Looking more specifically on this slide at the pipeline today. The pipeline is focused on muscle diseases with projects addressing the biology causing the disease that projects target. We believe all our projects have the potential to be transformative and competitive. AT132, targeting XLMTM or cross-linked myotubular myopathy, is our lead clinical project. XLMTM is a serious life-threatening neuromuscular disease characterized by extreme muscle weakness, respiratory failure and early death. Mortality rates are estimated to be 60% in the first 18 months of life. And for those patients who survive past infancy, there's an estimated additional 25% mortality by the age of 10. The project, as you may know, is on clinical hold following the tragic death of 3 boys in the ASPIRO clinical study. We have submitted our response to the clinical hold as planned, and we'll continue to engage with regulators to lift the clinical hold and dose the remaining patients in the ASPIRO trial. We remain very committed to the XLMTM community and to the transformative benefit AT132 can bring to XLMTM patients. AT845 is targeting Pompe disease. This will be our next project in the clinic. We have an open IND and are actively enrolling patients. Due to the COVID [indiscernible]. I will talk a little bit more about this project in a later slide. AT702, AT751 and AT753 are targeting segments of the DMD population. IND-enabling studies are ongoing for the lead project AT753, with plans to enter into the clinic during next year. I will also talk a little bit more about these projects in the later slide. AT466 is targeting myotonic dystrophy. It is still in the discovery phase, testing different technologies to optimize the construct to knock down toxic expression on the DMPK gene, which is a fundamental cause for myotonic dystrophy. GT001X (sic) [ GT0001X ] is the option agreement we have with GTRI, Gene Therapy Research Institute, in Japan. GTRI is managing this project that aims [indiscernible] RNA editing enzyme called ADAR2 as a treatment for sporadic ALS. The project has not yet reached the clinic. Finally, MDL-201 and MDL-202 are 2 collaborative projects with Modalis. The projects use Modalis' novel platform to regulate nonfunctional disease-causing gene in well-defined diseases. There are examples on how we are building our pipeline with competitive new technologies. Both projects are still in preclinical stage. In the future, I hope to share more information about these projects as they progress towards clinical development. Overall, I believe it's a very strong pipeline with possibly 3 projects in the clinic next year. Next slide, please. So as I said, AT845 will be our next project in the clinic. It targets Pompe disease, which is the disease caused by a deficient enzyme GAA or acid alpha-glucosidase. This enzyme breaks down glycogen. Accumulation of glycogen leads to tissue or organ damage, predominantly in skeletal muscle, cardiac muscle and in the CNS. Infantile-onset Pompe is very severe with high and early mortality rates. Late-onset Pompe disease is less severe with slower progression. Current treatment is limited to repeated enzyme replacement therapy. The project aims to deliver and replace the deficient GAA using AAV delivered systemically. The GAA gene would enter skeletal and cardiac muscle cells and allow a functional GAA enzyme to be continuously produced in the muscle cells where it is needed. The cartoons on the right describes the cause of the disease inside muscle cells, at the top end of the figure, and how AAV as a delivery vehicle delivers the GAA gene into the cell nucleus where the gene construct will be continuously transcribed to produce a functional GAA enzyme where it is needed. The IND is open, and we are aiming for the first patients to be dosed next year. The first Phase I/II study targets late-onset Pompe disease. Next slide, please. Recall, AT702, 751, and 753 are DMD franchise. They share the common feature that they target Duchenne muscular dystrophy, but each project specifically target segments of the population having mutation in different regions, specifically in exons 2, 51 and 53. To understand the creativeness and competitiveness of these projects, we need to understand DMD as a disease. DMD is a progressive serious disease leading to muscle problems, heart problems, disability and early death. It is caused by lack of dystrophin, one of the largest proteins in humans consisting of 79 exons, meaning that the functional dystrophin protein is built up from all these 79 parts. Dystrophin is needed for muscle strength, and mutation preventing proper translation and production of functional dystrophin leads to the disease Duchenne muscular dystrophy. Dystrophin gene is so large, it cannot fit into an AAV virus. So we and the competition are trying alternative strategies. Our DMD franchise builds on combinations of proven technologies to restore near full-length functional dystrophin in patient segments having their mutations in specific exons. We are regulating the dystrophin by delivering a gene construct that skips the mutated exon from the gene, thereby enabling continuous production of near full-length dystrophin. We call this vectorized exon skipping. In total, our 3 projects target about 25% of the total DMD population. The cartoon on the right show how a mutation in one of the exons disrupts the translation resulting in nonfunctional dystrophin on the left side of the figure while allowing the translation to skip the mutated exon, a large reduction of near full-length functional dystrophin protein as shown on the right side of the figure. We expect the 3 projects to have significant manufacturing, regulatory and clinical synergies. For instance, we are planning one clinical umbrella study for all projects with a common control arm and patient enrollment depending on new mutation eligibility. So as I finish my presentation and hand over to primary focus, blindness and regeneration, I just want to remind you what I said in the middle of my presentation. Our AAV manufacturing part of the center of excellence is supporting all AAV-based projects, including the AAV-based projects in primary focus, blindness and regeneration. So thank you.

Next, Jotaro Suzuki, Primary Focus Lead, will talk on the primary focus, blindness and regeneration, strategy and progress and also the cell therapy.

Next, Slide 15. This primary focus discovers new treatments that preserve and restore vision for patients suffering from disease of the posterior part of the eye that place them at high risk for blindness and delivers to patients. Currently, more than 160 million people worldwide are blind due to diseases of the posterior part of the eye and suffer from a significant decrease in quality of life. However, there are no effective treatments for these diseases or the drugs are not effective enough. Astellas is transforming the treatment of current ophthalmic diseases by leveraging its expertise in ophthalmic research and development as well as its regenerative medicine capabilities. To do so, we utilize next-generation modality technologies such as cell medicine and gene therapy to achieve the repair and maintenance of the critical eye cells that control vision. Next slide, please. Slide 16. Now this presents our strategic approach. We will focus on the development of therapeutics for retinal diseases, blinded, and expanding our innovative pipeline of cell and gene therapies derived from our research, development and manufacturing capabilities in the field of ophthalmology as well as exploring and developing next-generation modalities in collaboration with external partners. We will deliver value to as many patients as possible. We have developed platform technologies that can be used to produce better therapeutics, including research and development and manufacturing platforms for pluripotent stem cell-derived cell-based medicine such as ES and iPS cells, the AAV-based gene therapy platform, further enhanced by the acquisition of Audentes, and we have a set of ophthalmology capabilities for research and development of various modalities. Astellas is unique in having the capability of research, development and manufacture 2 innovative modalities in the field of ophthalmology, cell medicine and gene therapy. Next slide, please. Slide 17. This figure illustrates key lead programs being researched and developed on our PF: BR strategies. Astellas promotes multiple programs that target specific cells that are lost in diseases that lead to blindness. First of all, these programs employ innovative modalities and the RPE, which are the cells of retina affected by dry AMD, have been assigned to ASP7317. And ASP7317 is a retinal pigment epithelial cell transplantation program created using human pluripotent stem cell-derived retinal pigment epithelial cells and aim to inhibit the progression of the disease and restore visual function in patients with dry AMD. And in addition, there's gene therapy program that is being conducted in collaboration with the University of Pittsburgh. Next, the -- for the photoreceptor cells that are impaired in RP, we have the lead program in Astellas, ophthalmic gene therapy, ASP1361, which we acquired in partnership with CLINO that will be presented in the next slide. In addition, retinal ganglion cells are the cells that are damaged in glaucoma. In addition to the cell therapy program, we have a gene therapy program acquired from Quethera. The corneal endothelial cells that are damaged by corneal dystrophy, we are promoting cell therapy program. Although cornea is an organ that has already been widely used for transplantation, we aim to realize off-the-shelf cellular medicine by generating corneal endothelial cells from pluripotent stem cells. To this end, we are searching for innovative therapeutic means to protect and repair these vision-critical cells and that are being lost. Next slide, please. Slide 18. This shows a list of the pipelines. In advancing the lead project in cell and gene therapy, ASP7317 and ASP1361, we are enhancing our research, development and manufacturing capabilities as well as enhancing and accelerating the quality of the programs that will follow. The number of subsequent programs have already been expanded, as you can see. It follows a focus area approach that leverages a competitive R&D platform and a high degree of expertise in the field to generate multiple projects in a sustainable manner. Next slide, please. Slide 19. Now this slide shows the lead project in gene therapy, ASP1361. This program is intended to provide a single dose that will result in a sustained restoration of vision for patients who have lost visual functions due to inheritant retinal degenerative diseases such as RP, and this is from CLINO. AA virus-loaded Modified Volvox channelrhodopsin-1 is a photoreceptor ion channel with a wide range of light responses. By administering this channelrhodopsin-laden AAV into the eye, the ganglion cells of the retina can acquire higher ability to sense light. With this mechanism, for those blinded patients, we'll be able to restore their visual function. This program is scheduled for the IND in 2021. Next slide is Slide 20. Next, we are pleased to report on the progress of our lead project in cell medicine, ASP7317. We have just completed the first cohort of dosing in the Phase Ib/II study in dry AMD. As I explained in the second quarter results, we are contemplating a protocol revision and have submitted a proposal to the FDA for revision. And we have also reached an agreement with Japanese PMDA for the use of new cell API in clinical trials. We have completed the GMP production of cell APIs for the PoC study to be started in FY '22 at AIRM in the United States. Further, we established a cell manufacturing process to cover early commercial supply. BLA submission is planned after completion of PoC study. Next slide, Page 21. As an entry point in the field of ophthalmology, we are working on in primary focus: blindness and regeneration. We, Astellas, are establishing a firm foothold in regenerative and cellular medicine and the foundation of the cellular medicine value chain. During the R&D meeting in 2018, we demonstrated our journey to the cellular medicine how this has been progressing. Let me explain from the evolution of our capabilities. We continue to enhance PSC lines for clinical use with the evolution of cell differentiation protocols. As a result, we have established the foundation of multiple INDs in 5 years for -- from 2021, and we realized the substantial increase of manufacturing production as well. In order to avoid and reduce rejections, the biggest challenge in the cellular medicine, we acquired universal donor technologies to prepare for clinical application. We are making preparations, and we're establishing multiple universal donor PSC lines. We are beginning to apply this to RPE cells and natural killer cells. And also, in collaboration with panCELLa, we are considering the next immune-cloaking technology. We are steadily building the GMP production system. This year, in the state of Massachusetts in the United States, we opened a facility with GMP production functions. We can select regulatory compliant raw materials for the 3 regions, and we completed large-scale production of ASP7317 for PoC study. We are building the logistics system to deliver the cellular medicine to physicians and patients. In particular, we are focusing on the development of the formulation technologies to support the logistics. Technological development to freeze the final formulation and significantly extend its shelf life is making a lot of progress. Let me explain further details on the next slide. Next page, please, Page 22. In the drug product for cellular medicine, by now, there was a need for cryopreservation of drug substance, but in the new formulation, we can have cryopreservation of the final formulation. So it can be reconstituted at the hospital just before administration. There is no need for GMP DP production facility in all cases. Life -- shelf-life can be extended from days to years. Regardless of the surgery schedule, you can ship and release the final formulation flexibly. For example, you can send DPs to be used over a few months, and this will significantly improve the convenience. Next page, please. Page 23. This page shows the new Astellas center of cell therapy manufacturing. In order to further reinforce our R&D and manufacturing capabilities to support or challenge on cellular medicine, we opened a new facility in Westborough, Massachusetts, USA. This is a substantial enhancement of the functions of the AIRM, Astellas Institute of Regenerative Medicine. This facility houses research, CMC/manufacturing and clinical development functions. It can promote collaboration among the members, and we can make a decision comprehensively covering the whole process from early research to development, early commercial production. Half of the space is occupied by CMC research and GMP manufacturing. Based on close to 10 years of experience of PSC-derived cell therapy and GMP manufacturing cultivated as a pioneer and accumulated regulatory know-how, we have substantially improved our DS manufacturing capabilities for the cellular medicine. In addition to the formulation manufacturing -- in addition to the development of the new formulation technology, we are going to use this facility as a center of future supply chain. Next, Page 24. Including the facility in Massachusetts, we have 4 sites in Japan and the United States. They are building the structure to work on the cellular medicine in collaboration with internal and external members. AIRM in the Massachusetts state was established based on Ocata we acquired in 2016. It's now a center of Astellas regenerative and cellular medicine. Universal Cells was acquired to get the universal donor technologies. It's now a center of Astellas gene editing research center. Xyphos Biosciences was acquired in 2019. It has its unique and proprietary Advanced Cellular Control through Engineered Ligands technology. It became a center of Astellas next-generation generic antigen receptor cell therapy. In Japan, we have Tsukuba Biotechnology Research Center for CTM manufacturing for use in early-stage clinical trials. And we have AIRM satellite offices to collaborate with the academia in Japan and the drug discovery function in Tsukuba. Next page, please, Page 25. On the last slide, let me explain the organic use of Astellas cell therapy platform to realize our goals in the primary focus strategy. In the R&D Meeting in 2018, we explained the strategy of cellular medicine at Astellas as follows: first, establish a firm foothold in ophthalmology and establish the foundation of cellular medicine value chain; next, leverage universal donor cell technology and expand the cellular medicine pipeline to include other diseases beyond ophthalmology; next, combine stem cell technology and gene editing technology to evolve to next generation high-functioning cells. In the past 2 years, we effectively leveraged acquisitions and partnerships to evolve the cellular medicine, an important modality platform for Astellas consistently from drug discovery to commercialization. Here, as you can see here, in multiple primary focuses, the cellular medicine platform is leveraged. We have achieved the enrichment of the pipelines. This includes next-generation projects using universal donor cell technologies as well. Next page, Page 26. This page shows the organic application of the cellular medicine platform for cellular projects in each primary focus. We are conducting clinical studies for RPE cells. And following that, we have established the cell differentiation protocols in ophthalmology, immunology and oncology projects, and we are preparing for IND. For the cells in yellow highlighted circles, cell differentiation protocols have already been established for these cells. So we will continue to study for future GMP. By 2025, Astellas has a goal to achieve multiple INDs. We'd like to develop cellular medicine platform and leverage it for rollout into various disease areas, primary focus: immuno-oncology; mitochondria biology; and primary focus candidate: immune homeostasis, we will present later. There, we'll also talk about our initiatives on the cellular medicine. Thank you very much.

Peter, it's your turn.

Good afternoon. My name is Peter Sandor, Primary Focus Lead of the primary focus: immuno-oncology. So at PF-IO, we dedicate our collective strengths to find new ways to treat and cure cancer. We are building on immuno-oncology innovation powerhouse that we have to drive value for cancer patients and Astellas as well. And we will deliver first-in-class transformative treatment options for cancer patients. We have made tremendous progress since the last R&D Day in 2019, where we have explained our strategy and updated you on our clinical stage IO pipeline. Today, I will focus my presentation on the progress we have made since then. I will focus on the bispecific antibody and the allogeneic cell therapy programs, showing also how do we leverage our cell therapy platform as it was presented in the PF: blindness and regenerative medicine presentation. I will also briefly introduce our new PF candidate, cancer genomic alterations. Next slide, please, and we are in -- on Page 28. So why we are so motivated to discover and develop new IO treatments for cancer patients? Despite recent advances in cancer immunotherapy, approximately 80% of the patients still do not respond or become resistant to the currently available treatments. This is a significant unmet need. And that's the reason why we are so passionate about turning this 20% responder population to 100%. In order to build the pipeline on innovative medicines and deliver on this goal, we combine our heritage and experience in oncology with advanced technologies either developed internally or in partnership with the best minds in biotech industry and academia. Next slide, please. Our strategic approach is based on modality platforms. We have moved away from single-asset development to establish the modality platforms first, which can then generate innovative pipeline next. This approach allows us to learn, focus and deepen our understanding in cancer biology and also better much biology with the most relevant modality. We believe in that this approach not just delivers a broad pipeline but also will result in improved clinical outcome, improved probability of success and will drive continuous growth of pipeline programs over the next many years. Based on this strategy, we have spent the past 2 years to establish key modality platforms, namely bispecific immune cell engagers, oncolytic virus, artificial adjuvant vector cell technology, or aAVC, and the allogeneic cell therapy platform. We are combining internal capability via partnering and acquisitions to achieve our goals. Next slide, please. We are on Page 30. So how do we call [ the biology ] with the modality platforms and the pipeline at the end. This slide shows the cancer immunity cycle. It describes the cascading complex events of the innate and adaptive immune system in a simplified way, and they are numbered from 1 to 7, and the innate immune system is represented in the middle of the circle. These steps are including antigen release, priming, recognition and killing. They focus on modalities, which can act in multiple steps at the same time. Hence, they are multifunctional modalities. This approach is expected to improve the efficacy and avoid the escape of the tumor cells from the treatment effect. I would like to highlight here the oncolytic virus at step number one and three, which triggers cancer antigen release but also drives priming and activation of the immune system. Next slide, please. We are on Page 31. This slide highlights our key pipeline assets and programs showing the modality, the mechanism of action, stage of research and development as well as our respective partners. We have made a strong progress with our pipeline since last year. Our Phase I clinical stage program, including neuropilin-1, GITR, ASP7517 aAVC program and ASP9801 first oncolytic virus are progressing very well, and will deliver results in the coming years. We have highlighted these programs in detail, so I will not talk about them at this time. We have started to expand our pipeline as we establish our platforms. We are adding a new aAVC Phase I program targeting NY-ESO-1, ASP0739 and also initiating an additional ASP7517 study in solid tumors. We are also expanding our oncolytic virus platform. We have announced our newest partnership with KaliVir Immunotherapeutics on Monday this week. We have developed intravenously delivered oncolytic viruses based on KaliVir's unique proprietary platform. The first program, VET2-L2, which is highlighted on the slide, is in preclinical development right now. We are extending our bispecific immune cell engager and allogenic cell therapy platforms as well. As you can see, these programs are in preclinical or discovery stage, including the first convertible CAR-T program, the Mesothelin TCR program, which is partnered with Adaptimmune and the bispecific program partnered with Xencor. I will cover these platforms in more details on the next slides. Next slide, please. So first, let's take a look at the bispecific platform and its progress. Redirecting immune effector cells to cure cancer cells is a promising approach. The graph on the slide shows typical CD3 cell engager as an example. We are on the right track to build our capabilities and the differentiated pipeline targeting late 2021 with the first IND submission. Our research team has developed an internal platform to build multiple bispecific immune cell engagers in-house. We have also entered into a strategic collaboration with CytomX Therapeutics early this year to develop bispecific T-cell engagers using CytomX's Probody technology. Probody technology can limit the activity of the bispecific T-cell engagers to [ trigger ] tumor tissue only. Hence, it can avoid undesired off-target, off-tumor effect. Our collaboration with Xencor is progressing according to the plans as well. Next slide, please. So I will switch to the allogenic cell therapy program and development, and I will talk about these in more details during the next couple of slides. It is our newest modality platform, and we have not updated you on this during the past events. Our cell therapy programs will combine universal donor cells, the NK cells developed by Universal Cells with the convertibleCAR system from Xyphos. It will share more -- I will share more details on these technologies on the next slides. But as you can see here, the combination of these 2 technologies will enable us to establish a highly differentiated unique cell therapy pipeline, which can address critical unmet need. Universal donor cells or NK cell product will be a reliable standard quality from regulatory and manufacturing perspective. It will have better economies of the current cell therapy products, including allogenic ones. Therefore, it will be able to reach more patients than others. At the same time, maybe most importantly, the convertibleCAR system may allow flexible treatments. It allows dynamic modulation of the cells without additional engineering. It can also directly address to more heterogeneity within a patient and between different patients. Our vision is to deliver a standard cell therapy product, which can be individualized to the patient needs without any delay and further engineering. Next slide, please. We are on Page 34. So I will highlight here some data from our Universal Cells research team on the UDC-derived NK cells. Universal donor cells are engineered to be accepted by the patient immune system. This is a critical step for allogenic cell therapies. They are sourced from induced pluripotent stem cells, which are immortal cells retaining a normal genome, which allows them to produce an unlimited supply of starting material for the cell therapies. UDC cells are optimized, in our case, to receive the convertibleCAR system or other necessary gene editings and then differentiated into NK cells. As you can see on the top right side of the slide, we are able to differentiate CD56-positive NK cells from the UDCs. Our team has also optimized the CAR construct for these cells that has an improved cytolytic capability compared to the standard 4-1BB costimulatory domains, as you can see on the bottom left side. These cells are fully functional, capable to cure target cells, as shown on the slide as well. Next slide, please. So switching for Xyphos Biosciences convertibleCAR system. This technology combines an inert NKG2D-based chimeric receptor, which is inserted into the UDC NK cells as I have shown in the previous slides. And it adds a modified antibody or MicAbody that exclusively binds to the engineered inert NKG2D receptors. The INKG2D and MicAbody complex will act as a fully functional CAR once they bind in vivo. The advantage of this system is flexibility and enhanced tumor targeting compared to the static traditional CARs, which is shown on the left side of the slide. This convertibleCAR system is highly adaptable. The CAR NK cells can be rearmed with the same or a different MicAbody or they can target different antigens at the same time dependent on the disease profile and the needs. These receptors and MicAbodies can also be used to modulate the cells in situ without additional engineering needed. Next slide, please. So again, some detail from the Xyphos team showing the fact of the convertibleCAR system attached to a T-cell in Raji B cell lymphoma model. The color scale shown on the slide represents the tumor burden in the animals and the different rows represent Day minus 1, so a day before the T-cells were applied, Day 6 and Day 13 in the experiment. The convertibleCAR-T cells were infused on Day 0, and the animals were dosed 2 times per day, 5 times MicAbody targeting either antigen A or B. Please note that the convertibleCAR-T cells are the same regardless which recovery has been applied and reinjected. It is an aggressive disease model. As you can see on the right side of the slide, it kills most of the animals by Day 13. The convertibleCAR-T treatment clearly shows clearance of the tumor, the 2 main panel demonstrates. However, the strength of the response depends on the MicAbody, which is applied in different [ tenures ] and settings. Next slide, please. In order to manage the complexity of the internal and partnered cancer cell therapy work with a holistic anticancer approach, we have established a center of excellence for cancer cell therapy at the Xyphos site in South San Francisco, California in the United States. The center will lead not just the cancer cell therapy research, but it will also manage or enforce fully established platform, including in-house NK cell manufacturing at the AIRM facilities in Cambridge, Massachusetts as it has been shown in the previous presentation. And we will closely collaborate on this with PF: blindness and regeneration. I would like to highlight here our partnership with Adaptimmune. We are jointly developing Universal donor cell-derived T-cell programs using Adaptimmune's proprietary TCR or T-cell receptor system. Our first program targets Mesothelin using an HLA-independent TCR system. Next slide, please. We are building our cancer cell therapy capabilities and moving our research and preclinical efforts rapidly forward. I'm very confident that our highly experienced teams will deliver the program successfully and on time. As you can see, the leadership team has diverse entrepreneurial, academic, biotech and pharma background in all critical areas, including research, development, translational sciences, regulatory and manufacturing. Next slide, please. I would like to switch topic very briefly and spend the last minute before the summary of this presentation to introduce a new oncology research area, which is the foundation of the primary focus candidate: cancer genomic alteration. Next slide, please. As you know, multiple genetic and epigenetic events characterize tumor progression and define the identity of the tumors. These genomic alterations induce cancer driving mutations, gene infusions, amplifications, deletions, post-translational modifications, which can lead to tumor initiation, metastatic spreading and resistance to tumor treatments, including IO approaches. Our holistic treatment approach cannot be successful without tools to target these genomic alternations. This way, we can create synergistic multimodality approaches against notoriously resistant tumors, modulate and reprogram the tumor microenvironments, and by these, supporting more cell and bispecific programs, create synergy and improved outcomes [ with inner ] and other cancer therapies. [ I think a ] new primary focus, we are focusing on small molecules, binding to hidden pocket targets and also approaches to degrade pathologic proteins in the cell. These new platforms will enable us to address critical cancer biology and establish a primary focus in the near future. We are very early in the work here, but we will keep you updated on our progress. Next slide, please. We are on Page 41. In summary, we have made significant progress with implementing our strategy. We are on track with building capabilities related to our modalities, including the primary focus candidate, and we have started to deliver pipeline candidates. We have continued to progress our Phase I studies and potentially report new data during the coming years. In addition, we plan to initiate our first aAVC Phase I studies in advanced solid tumor patients next year and other INDs are coming as well, as I highlighted earlier. Thank you for your attention. And I will hand over the virtual microphone to the primary focus: mitochondria biology. Thank you.

[Interpreted] Microphone, please. Microphone, please. Sorry. My name is Itsuro Nagase, Primary Focus Lead for Primary Focus: Mitochondria Biology. I'll talk about its strategy and the progress. Next slide, Slide 43. This slide shows why we focus on mitochondria biology. Mitochondria are present in almost all human cell types and play essential roles in energy production and in processes such as metabolism and cell signaling. Since it is a very important cell function, if there's a missed disorder, then that will involve various diseases of kidneys, liver, heart, muscles, CNS and the peripheral organs. Many of those organs that -- where the disease are caused have significant unmet medical needs, with few treatment options because it is rather difficult to make a drug. And yet, in our focus -- primary focus, we are aggressively trying to make a drug in this area. Next slide, please. Then the -- our strategic approach. First is a focus. We focus on mitochondrial biology and the target indications, diseases impacted by mitochondrial dysfunction, covering wide range of spectrum from rare diseases, such as mitochondrial diseases, to broader indications, such as ischemic reperfusion injury and neurogenerative disorders. And next, how we can strengthen our portfolio? For this, we acquired Mitobridge and Nanna Therapeutics. And we have, in this way, top-notch academic networks on mitochondrial biology. So based upon advices from them, we identify target diseases through deep understanding of the link between mitochondrial biology and disease pathophysiology. That is our strategy. And when the study started, then we prioritized, get the PoC/PoP. And then we select scientific relevant indication for faster understanding of molecules' potential, so commercial viability is not so important at that stage. And once we select a patient population with [ size-driven ] and then take the PoP and then expand into commercially viable indications. That's our strategy. On this slide, you can see the phenotype screening and also the cell therapy approaches as shown, which will be described in the following slides. Then how I will translate this strategy into our portfolio? In the next slides, Slide 45 explains that. Mitochondria has many functions. Therefore, we take a multiple function approach. First is the gene regulation and mitochondrial biogenesis. ASP0367 and 1128 are some of them. Those are the PPAR-delta modulators that are highly selective. So if you stimulate PPAR-delta subtype, then there's an increase in the proteins that are associated with fatty acid oxidation and cause mitochondrial biogenesis. In this category, the Nanna Therapeutics are included in this category. Second is the mitochondrial stress response. Mitochondrial stress signals, such as ROS or the mitochondrial DNA, are key factors in cell damage and inflammation. These are some of the research projects in this category, modulating the signals. Those are our research projects. Next category is NAD enhancement and increased mitochondrial membrane potential. Mitochondrial's main function is the energy production. So if it is affected, then you get the disease. And this ATP production, those NAD is enhanced. And also the mitochondrial membrane potential is directly enhanced. Such are the projects in this category. Last one is mitochondrial fusion and fission. This is the new research area. Mitochondria under microscopic view, already, you can see the repetition of fusions and fission. And so if this fusion and fission stops, that would cause the disease. So if you look at the literature, oncology area and also the neurogenerative disease and mitochondrial fission and fusion disorder are related. Therefore, we are targeting this category of the disease. Next slide, please. Slide 46. We have leading programs. Let me report on their progress. First one is ASP1128, PPAR-delta modulator. This is an injectable. This is indicated for cardiac surgery associated AKI. Currently, Phase IIa study is ongoing. The indication is after cardiac surgery. Enrollment started from November last year. But since, as you know, COVID-19 pandemic occurred, there is a substantial decrease in the number of surgical operations for the cardiac. So we had difficulty enrolling the subjects. We had to suspend the enrollment at one point in time. We are resuming the enrollment right now. Clinicaltrial.gov shows the schedule. According to that, in January 2022, the first data will become available, and we are proceeding with the development. Next program is ASP0367, PPAR-delta modulator. This is an oral agent. Two programs are ongoing: primary mitochondrial myopathy; and DMD. For PMM, Phase II/III studies. DMD, Phase Ib study is going to be the next study. Regarding this program, after Phase I, 2 years have already passed. Why it's taking so much time? Let me explain a bit. Phase I study was completed. And then the development project team with the patient advocacy group discussed the study plan. To proceed with the development for rare disease, this is essential. And the actual treatment duration is going to be longer than initially expected. Then nonclinical toxicity studies will be required for a longer time. So we need time to prepare for that. And by coming up with the data, and we discussed with FDA the study we'd like to do next. We reached agreement, and it took time to do this. That's why it took a little longer time that we had some achievements as well. First track designation was granted. What's more important is that for primary mitochondrial myopathy, the next PoC study can be implemented as a Phase II/III study according to the agreement with FDA. If the next PoC study results are positive, then we can proceed to submission of filing based on the data. As for DMD, it's a Phase Ib study. Last month, the study was initiated. March '22 is the target for the steady progress for the study. Next page, we acquired Nanna Therapeutics in April this year. Let me explain its meaning. Nanna Therapeutics is the heart of European biotech. It's a company based in Cambridge, U.K. This company is focusing on the improvement of the mitochondrial function in their research. They have their unique medicinal chemistry strengths. In the mitochondrial cells, this is a small [ organ now. Compounds, ] it goes through the cell membrane, and it has to go into the nucleus. So you need different properties for the compound. Compared to usual, they have unique medicinal chemistry technologies, and they also have a phenotypic screening system. Medicinal chemistry or chemical laboratory, they built. When they do the screening, they use a different method compared to the conventional one. If you use a conventional method, the target molecules are identified first and then you have an action of the compounds. If you do this, molecules already known in the world, as a target, so we cannot be the first in the world. They changed the sequence on the order. They have an action on the cells to make sure that it's going to function on mitochondria. They search for such compounds. And then the molecules with the action of the compounds will be searched. So they have an approach to change the sequence of the search. Very innovative targets and lead compounds can be found. We think it will lead to such a method. Next page, please. Page 48. This is my last slide. Peter and Suzuki-san already mentioned that in mitochondrial biology, we started -- we are starting our cell therapy approach. It's slightly different from the conventional cell medicine approach. We are focusing on the phenomena called mitochondrial transfer. As you can see on the right side of this page, if the cell is damaged, as in red, compared to that, the cell in blue, the same tumor stem cell, mitochondria would be transferred to the damaged cell. This means that the dysfunctional cells with mitochondria, the functional mitochondria can be transferred in the damage cell. This is an interesting approach. To do this, we have a primary focus: mitochondrial biology. We have scientific knowledge and AIRM cell and medicine platform and Universal Cells' universal donor cell technologies. We have to realize the synergistic use of these to develop a new platform. That's our approach. By doing this, mitochondrial disease patients hopefully can be offered a new therapy. That's all from me. Next, immune homeostasis, Furukawa is going to present.

[Interpreted] Yes. Now I'd like to introduce the current status of Immune Homeostatis, which is one of the primary focus candidates. My name is Furukawa, a Primary Focus Lead of Immune Homeostasis. The mission of this primary focus candidate is to create curative therapies for patients with immune-related disorders. Next slide, Slide 50. So far, we have focused on the biology of ASIM, antigen-specific immunomodulation, as one of the primary focuses and have been conducting drug discovery research. ASIM is an approach aimed at curing allergies using DNA vaccine technology called LAMP-vax. Several programs such as ASP0892 and ASP2390 have reached the clinical stage with this approach and the drug discovery research have already completed. At the same time, ASIM primary focus has been exploring new immunomodulatory technologies following LAMP-vax. As a result, as I'll be introducing later, we have found several promising next-generation platforms that go beyond this in concept of antigen specificity, such as cell therapy and research alliance. So we have designated these next-generation research as a new primary focus candidate, immune homeostasis. ASIM, in a way, will graduate from the primary focus and will focus on drug discovery research for a new primary focus candidate, immune homeostasis. Next slide, please, Page 51. The mission of the primary focus candidate, homeostasis, is to deliver safe and curative therapies for patients suffering from immune-related disorders. To this end, we aim to develop new therapies that can specifically suppress only disease-related immune responses without affecting the systemic immune system. Current treatment for autoimmune diseases are primarily symptomatic treatment such as immunosuppressants, but they do not target only autoreactive immune cells. Suppression of the entire immune system by immunosuppressants causes challenges such as causing serious side effects and increasing the risk of infection. Immune homeostasis is a regulatory mechanism that maintains a balance between immunogenicity to pathogens and immune tolerance to self. Immunomodulatory cells, such as mesenchymal stem cells and regulatory T-cells, are known to play an important role in maintaining immune homeostasis. We aim to develop innovative therapies that restore immune imbalance that causes early immune diseases by utilizing the mechanism of homeostasis maintenance that human innately have. Next slide, please, Slide 52. Astellas focused on transplantation immunology as a focus disease area to promote the R&D of immunosuppressants such as PROGRAF so far. As was presented, Astellas is now actively focusing on the acquisition and development of capabilities related to the cellular medicine. The experiences of R&D in the field of immunology, we have built so far. And we have capabilities of the cellular medicine. By using this, we'd like to establish a competitive and innovative modality in the field of immunology as well. As a lead program, we are promoting a preclinical research of human hemangioblast-derived mesenchymal stem cell identified by AIRM. MSC is a cell which exists in the human body. They are recruited to the site of inflammation to suppress the excessive immune response and repair the damaged tissue. It plays an important role in the maintenance of the immune homeostasis. AIRM has technologies to differentiate MSC into PSC, such as ESL, and it can produce a large amount of uniform and highly active cells in large quantities to regulate. By using this, we are developing therapies for autoimmune diseases. Universal Cells has rejection-free universal dose cell technologies and gene editing technologies. By leveraging those technologies, we are also trying to enhance the activity of a mesenchymal stem cell and reinforce the platform technologies by developing new immunomodulatory cells. We also actively collaborate with external partners to acquire and develop innovative modalities to restore the immune homeostasis. For example, right now, we are collaborating with Pandion to develop tissue-specific immunoregulatory technology. This technology is an innovative technology to enable the induction of the immunoregulatory cells in the body. By developing these new platform technologies, we are hoping to enrich and expand our pipeline. Next page, please. Page 53. This page shows the 3 modalities under investigation and their MOA. The lead program, MSC, will accumulate locally in the site of the inflammations, and they can have a specific expression of the disease-specific immune responses only to promote the cure of the disease by recovering the immune homeostasis. At Universal Cells, cellular medicine research is ongoing, using immunoregulatory cells. This can suppress the autoreactive T cells selectively and induce Treg, so we can expect action to recover immune tolerance to self. The third is the tissue-specific immune therapy we are working on in collaboration with Pandion. We can control the immune response in a tissue-specific fashion with autoimmune disease to activate the Treg in the tissues and recover the immune homeostasis. These programs are still in the preclinical stage, but the lead program, MSC program, is aiming for IND and aiming to enter the clinic in FY '22. That's all from me.

[Interpreted] Yes, then, this is the last presentation on Page 55. In this session, we talk about the Astellas creates a breakthrough in drug discovery. And on this page, you can have the 3 keywords shown in red. Our objective is to develop those 3 key technologies and biology, modality to combine to make a new drug breakthrough. Next page. This shows new screening approach using the AI and machine learning. In conventional high-throughput screening, biochemical assays for limited parameters have been performed from chemical libraries of up to tens of thousands of compounds, but it takes several months to half a year to find new compounds that are biologically active or hit. And the diversity of compound structure is limited in these libraries because it is only tens of thousands. In contrast, in screening, it can virtually create a huge number of compounds exceeding 100 million and can simultaneously evaluate various physiological activities from various aspects using AI and machine learning. It can deal with not only static, but dynamic changes of structures of compounds or target proteins contributing to high-quality hits with better clinical predictability. Next, Slide 57. This is about the robotics. For using robotics, physiologically relevant assays which were difficult to be implemented by researchers can be processed remotely at the high speed and at a high level of precision. At the company, we introduced a robot called Maholo the other day. As you can see on the upper left, you can see a picture of the robot. As you see, Maholo has 2 arms. It's an experimental robot. It can perform complicated long-term difficult process exactly the same way every time. It can reproduce the behavior of the skilled researcher by turning it into a number, and it can deal with the setting of the detailed experimental procedures. The robot acts, not just on behalf of the human beings, I will explain the details on the next page, but disease derived cells by differentiating the IP cells, reflect the pathophysiology. So it's useful to evaluate the pharmacological effect of the new drug and the analysis of the mechanism. To culture these cells, you have to continue very difficult work for humans, which are usually difficult for human beings. The process is very complex, and it's also difficult for a skilled researcher to develop all uniform cells. We can culture IP cells in humans, difficult to be handled, and we completed optimization for compound screening. It can contribute to the cell culture, which human cannot do manually. It can contribute to the generation of the reliable data. In drug discovery and research, a lot of robots are being used. But we can differentiate the patient-derived IPS cells, and it can also be used as a tool to examine the pharmacological efficacy of a compound -- candidate compounds such as small molecule and antibodies. And in using the robots in the IPS drug discovery, we think we are pioneer in the world. We adopted this in the compound assessment for the 4 drug discovery targets. We are now in the stage to confirm the efficacy of the candidate compounds and discover the new candidate compounds. Next, Page 58. This is an example of human-mimetics. Organoid is a 3D organ-like structure derived from the differentiated stem cells such as IPS cells. It has differentiation process unique to human organ and also part of hematology and self-organization is possible into GI tract and nerve tissues. In addition to the organ differentiation and regeneration research, this technology can be used in the assessment of efficacy and safety of a drug. We can maintain the function for a long time, which 2D cells cannot do. We can detect the response to the drugs in human organs, which couldn't be detected with a conventional method. We are doing research in aiming for practical use in around 2022 in cancer microenvironment and GI tract organoid. Next, Page 59. Let me talk about the prediction of the clinical outcome using QSP, systems pharmacology modeling. This is a technology to model the interaction between the biological system and the drugs for analysis. A large amount of data is processed statistically, but not only search analysis, but also, you can describe the multiple pathways to disease and physiological elements. We can generate virtual patients with different backgrounds in the model. You can simulate the effect of the combination of multiple drugs with different MOAs. You can try a variety of combinations of drugs by considering the differences in the respective patients. And this can be used for the design of the sequence of the administration and -- dosing and administration. This technology is already put to practical use in drugs for various diseases, including cancer. Page 60. I talked about the technologies today, but these are just some of the examples of the technologies we have right now. These technologies on this page are already put to practical use or moving in that direction. Each one of the technologies is important, needless to say, but what we place the most importance on is the synergistic use of these technologies. I talked about Maholo robot. We can implement organ on chip or organoids into the Maholo robot, then we can develop more complex physiological relevant assays to verify the concepts. And the results of the assessment can be combined in a synergistic way with a QSP analysis and imaging and other visualization technologies to identify a more appropriate delivery system or dosing and administration. You can implement the verification of the high-quality drug efficacy and pharmacology and which DDS, drug delivery system, and dosing and administration method is more appropriate. We can enhance the clinical predictability in the nonclinical stage. So there are a variety of experimental and valuation assays nearby. They can work closely and easily in a timely fashion. We are in such an environment, that's the strength of the company. We'd like to realize new drug discovery by the synergistic use of multiple technologies. That's all from us. Thank you very much.

[Interpreted] Next, we'd like to take questions. [Operator Instructions] Any questions?

[Interpreted] [Operator Instructions] The first question, Citigroup, Yamaguchi-san, please.

[Interpreted] Yamaguchi speaking. Can you hear me?

[Interpreted] Yes.

[Interpreted] The first question is as follows. You have explained many projects, but many of them are at early stage before talking about those numbers. But in order for the management, you may have done the calculation on the value of the project. So in total, I don't know whether it is JPY 1 trillion or JPY 2 trillion. If you have such calculation, I would appreciate those numbers.

[Interpreted] Thank you for your question. Okay. Then let us respond to your first question. Yasukawa-san?

[Interpreted] The value of the projects, when it comes to the clinic, we calculate. Therefore, for those projects in preclinical stage, our scientific evaluation comes first, so economic analysis is not done. That is our rule.

[Interpreted] Then if you just add those in clinic, how much is it?

[Interpreted] Okamura-san, please?

[Interpreted] Okamura speaking. I should be accountable so I don't say no, we don't have any calculation and yet still, for instance, in our plan, post PoC program, the revenue forecast is this and that. That is not what we are doing in this calculation. And for those who are in the clinical stage, as was explained, we first develop the gate indication. But if you look at the expansion of the indication, that would increase the value. So inclusive of that, without any assumption of the success probability, several thousand billion. And in total, inclusive of the revenue, it is not totally wrong to say JPY 1 trillion.

[Interpreted] So you're talking about the projects in clinic right now?

[Interpreted] Yes, that's right.

[Interpreted] May I ask you another question? ConvertibleCAR was explained. This project is using UDC off the shelf, universal application. In this project, regardless of the tumor type, what is that doing? Is it going to be a project like that? ConvertibleCAR potential is something I'd like to know more about.

[Interpreted] Thank you very much, PFL is going to explain. Peter, please.

Sure. Sure. The convertibleCAR NK cells, what we are developing are UDC-based. Therefore, they will be off-the-shelf programs. Tumor targeting is defined by the CAR system. As an example, the first program, which is approaching IND next year targeting CD20, is still an autologous CAR-T program to -- as the first program in the clinic. I hope it answers your question.

[Interpreted] Yes, Daiwa Securities, Hashiguchi-san, please?

[Interpreted] Hashiguchi of Daiwa Securities. The first question is on DMD's gene therapy. DMD, many companies are researching with various approaches. For instance, a microdystrophin genome is inserted and expressed. That method is used or the CRISPR is inserted to edit the genome for exon skipping. Those are the methods developed. And against these, your [ SNI ] using the AV vector inserted to skip the exon, what are the clinical utility and benefit of your method?

[Interpreted] Thank you. Again, PFL will answer. Ulf-san, please.

Thank you for that question. It is true that DMD is a very competitive disease. With several competitors ahead of us in the clinic, in particular, we feel that Sarepta and Pfizer's and microdystrophin approach is maybe our key competitors. As I explained during my presentation, dystrophin is a very large protein and cannot take into AAV. So we all use different technologies and all aiming to try to restore functional dystrophin functioning. Now our belief is that our project restoring near full-length functional dystrophin will be superior to microdystrophin, which is severely translated protein that Sarepta and Pfizer is working with. But -- so we may not catch them on the time line, but we believe we will have a superior product with near full-length dystrophin.

[Interpreted] Another question, immune homeostasis lead program. MSC and autoimmune diseases were explained. In Japan, there are some approved products already in Japan. So what's the difference compared to them?

[Interpreted] Furukawa-san, please?

[Interpreted] Thank you for your question. MSC, a lot of clinical studies have been implemented for MSC. The problem is that although MSCs are used between lots, there is a lot of variability. It's difficult to get the uniform efficacy. And the efficacy may not be so high and that's a challenge. At AIRM HMC -- at AIRM, it's like ESLs. It's a multipotent stem cells to produce a large amount of uniform, highly effective cells. So the -- in terms of the activity and stability compared to the existing MSCs, it's more competitive as a platform.

[Interpreted] Mizuho Securities, Tanaka-san, please.

[Interpreted] Tanaka of Mizuho Securities. My first question is that in your presentation, focus area are being fused or converged. But now with your focus area approach, how much percentage is used for your R&D cost? Maybe Okamura-san can respond.

[Interpreted] Okamura-san, please?

[Interpreted] Thank you for your question. Well, the calculation is very, very difficult. If they are in clinical development stage, since they are at early phases, the weight is not so large. On the other hand, if they are still in the research stage, frankly speaking, well, the percentage is much, much higher than the general research project. And that much is injected to the primary focus. So if you look at the balance, the -- out of R&D, 1/3 are spent for focus area approaches.

[Interpreted] Okay. Now I understand. Then the second question is easy question. ASP7317, Ib enrollment is now completed according to your presentation. So after Ib result is obtained, an RMAT designation might be thoughtful. But when can you get that designation? The answer, Suzuki-san, please?

[Interpreted] Thank you for your question. Suzuki will respond.

[Interpreted] As soon as possible. In order to get the approval [ rightfully our way ], like RMAT, it might be used. And thus, for the application for RMAT, the currently ongoing Phase Ib study results, we would like to challenge on the application. As for the completion of this study, in November '22 and it is on the home page.

[Interpreted] Nomura Securities, Mr. Kohtani, please.

This is Kohtani, Nomura Securities. I have a question on gene therapy, specifically AT132. While I understand that SPR trial is still under investigation, and it's difficult to comment on the trial, but the fact stands that there have been comments made by the investigators in the SPR trial. I'm referring to a response to an editorial written by Wilson and Flotte, and the response by Perry B. Sheih, et al., in the August publication of the Human Gene Therapy journal. The whole concern about high dose AAV comes from research done by James Wilson in 2018, where he showed that high-dose AAV can trigger hepatotoxicity and sensory neuropathy in animal models. Wilson states that, "While the precise mechanisms that led to these toxicities remain unknown, some hypotheses have focused on the role antibodies to AAV that either preexist or rapidly accumulate following vector infusion." Now in response, the investigator states, "For treatment with AT132, liver findings in these 3 boys included intrahepatocellular and canalicular cholestasis, [ kankannai ] tanjuuttai, and notable lack of prominent liver parenchymal inflammatory cellular infiltrates." If there were no inflammatory cellular infiltrates, doesn't this preclude the hypothesis raised by James Wilson? This is my first question.

[Interpreted] Thank you very much. Ulf, could you respond to this question, please?

That is -- thank you very much for the question. That is a very detailed question, but I will at least partly try to address, even if I cannot sort of definitely answer the question the way you phrased it. But we've done a robust investigation. And as I told you during the presentation, we have submitted our response to the clinical hold to the FDA that we remain committed to the project and its, what we believe, transformative benefit to the XLMTM community. Now I cannot go into the detail of the response to the FDA or the time line to complete the investigation. But our robust investigation do not suggest that the serious adverse events or the tragic event is caused by any immune reaction to the AAV vector or the drug product itself, which I think is sort of driving some of the findings and preclinical research from Dr. Wilson, but rather, a combination of characteristics of the 3 boys having existing concomitant liver disease, which is very, very common in this disease, being older and heavier and receiving a high dose of AT132. We -- so we've completed this investigation and submitted the response, and we are now in dialogue with the FDA and hope to be able to lift the clinical hold and dose the remaining 3 patients. And as I said, we remain committed to AT132 and its value to the XLMTM patients.

So the second question is also, again, on gene therapy. So it's well-known that targeting muscle cells would require ten to hundredfold dose of AAV compared to easier targets like liver. Now Audentes is obviously focused on AAV gene therapy of muscle-related diseases, which is presumably the reason why Audentes is building a 20,000-liter production facility in North Carolina. If it turns out that high-dose AAV is, well, difficult going forward, well, in response to your first question, this may not be viable, but would this affect your R&D strategy in any way? This is my second question.

It is -- am I -- can you still hear me?

Yes.

Yes. No. It is true that it's -- in particular, for AT132, it is high dose being used, which, of course, is predetermined from the preclinical model and the predicted doses and you do always go into in gene therapy studies with pharmacologically -- what you believe is pharmacologically effective doses. But it's high doses to reach to the muscle cells and you need to reach as many muscle cells as possible for your efficacy. Now it doesn't have to be as high of a dose as we are using in AT132. We are confident in future projects which is using the same AAV vectors, but lower doses and also studying the pieces which is not associated with preexisting liver conditions that it's not going to affect and be safe to proceed with them. But pointing to your question about if we're going to change our strategy, we and everyone else, and I think I was trying to also point that out in the presentation, are always looking for further innovation in this field to be able to drive down doses, simplifying manufacturing process and also have delivery vectors that is more efficient in the [ troughs ] for targeting very specific cell types. So we expect to try to get access to novel innovation in that space that will help us also to manage dosage and manufacturing in the future.

So third and last question on the immuno-oncology side. I am looking at the clinical trials for both ASP1948, the NRP1 antibody, and ASP1951, the GITR antibody. Both of these P1 trials are very large trials with almost 500 patients, with multiple arms containing PD-1 antibody combinations. It looks like in July, according to clinicaltrial.gov, Merck in the U.S. decided to join both of these trials as a collaborator. In fact, both of these trials now have a keynote identifier. The question is this. What does this mean? Is this just Astellas learning the lesson from ASP8374, which was running behind competition? What did Merck see that warranted joining these trials? This is my final question.

[Interpreted] PFL would like to respond. Peter, could you respond?

Yes. So Merck has partnered with us to supply KEYTRUDA for these studies, this combination. As you know, many of the check on modulators, a PD-1 combination is probably required for better efficacy. And I would also highlight here that neuropilin-1 is a unique molecule or antibody first-in-class in clinic, which may have to get some interest there. And also GITR has unique antibody structure. It's a tetravalent antibody, which may deliver hopefully or can be translated into clinical outcomes soon. I hope it answers your question.

I'm sorry, you said tetravalent antibody?

Yes, it targets -- the GITR structure not simple. It seems that you need to address multiple parts of the GITR target.

Well, the PD-1 antibody that is being used is both KEYTRUDA and Opdivo. I don't see Bristol-Myers Squibb joining your trial. Is there a reason why it's Merck?

I don't know why Bristol is not joining. Merck is our partner, as you know, on multiple clinical studies, combination in pipeline. KEYTRUDA is a well-established PD-1 from a clinical and preclinical science perspective. We turn on this experience why they are definitely the right partner for this drug.

[Interpreted] Goldman Sachs, Ueda-san, please.

[Interpreted] Ueda of Goldman Sachs. I have 2 questions. Number one, gene therapy risk factors are my questions. AT132 progress. This time, 845 and 753 are advancing. So for the other Audentes product, is there any impact? And also in the gene therapy, early quality, complete response rate is issued. So with Audentes, you may be able to suppress the vector's responses. Is there any risk in terms of these vectors?

[Interpreted] Then to the first question, Ulf-san, please?

Yes. I think it's a similar question as before about the clinical hold and our complete response for AT132. And although I cannot go into the response in detail or to the FDA, our investigation suggests that this is not related to the drug product or the AV vector, but rather, the combination of characteristics of the 3 boys having preexisting liver disease, being older and heavier and receiving the very highest dose of AT132. Now we don't believe that this is affecting the remaining portfolio, which is using a similar vector, but are studying different diseases, which is not characterized by high incidence of preexisting concomitant liver diseases, and we are also planning to use lower doses in those diseases. So overall, the Audentes portfolio is progressing as expected and planned and -- except clearly for that we are clinical hold on AT132.

Mr. Ueda, did we answer your question? You have another question?

[Interpreted] Regarding the manufacturing, could you comment on the manufacturing?

[Interpreted] Could you repeat your question again?

[Interpreted] Vector manufacturing quality led to complete response letter for other companies. We don't have to worry about such an issue for Audentes?

[Interpreted] Thank you very much. Ulf-san, please?

Well, thank you. That's a really tough question. And I will try to address the question without speculating. But you point to really important capability in this new industry, which -- where everyone is learning for how to do manufacturing and where the regulators are learning also on how to evaluate the CMC packages. This is one of the really important capabilities in Audentes and in our center of excellence in that they early on invested in a manufacturing facility, which now they've been operating in 4 years. And one of the very important thing, for instance, for AT132 is that it's been the same manufacturing process throughout the clinical development of the project. So the quality has stayed the same for all the patients being treated in the study. And that's one of the reasons why we feel confident that the clinical hold and the serious adverse event leading to the tragic death was not caused by the CMC manufacturing.

[Interpreted] Does it answer your question? I believe you have another question?

[Interpreted] The strengths and the positioning of your research institute, what ground is that inclusive of the project platforms and the [ M&A ] are ongoing, so how do you position your own research institutes?

[Interpreted] Yes, [ Ken-san ], please.

[Interpreted] Yes, positioning of the Astellas Research Institute. As we presented today, from the upstream to the downstream of the researches, only a single company cannot do in recent years. Therefore, we have to focus on what we would like to do. And in order to execute that business, we have to separate the capabilities. And then we select the capabilities that are not internally existing and we seek for the external. On the other hand, the academia or the biotech, they don't have the comprehensive pharma technology. Therefore, they cannot take the data needed to submit the R&D. Therefore, the assessment or the analysis and also the metabolic researches, we have those capabilities in Tsukuba. By combining those technologies and methodologies expertise, we're able to get the synthetic impact to have the win-win situation. That is our understanding. So going forward, Tsukuba has its general comprehensive capabilities, which is quite important. And by utilizing, leveraging on their expertise, we will be able to realize the real value that is upcoming from external.

[Interpreted] Thank you. It's time to complete today's R&D Meeting. Thank you very much for your participation. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]