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

Thank you very much for joining our R&D meeting out of a very busy schedule. I'm delighted to serve as [indiscernible] from Corporate Advocacy and Relations. Thank you for your time. You can join this meeting via Zoom Webinar or live streaming. After our explanation, we will go into Q&A session. You can ask questions only through Zoom Webinar. You cannot ask questions in our live streaming. Today, we have simultaneous interpreting between Japanese and English. If you're joining from Zoom Webinar, from the Zoom screen menu, you can choose the language of your preference. We're going to explain based on the meeting materials posted on our website. Today's presenters are as follows: Representative Director, President and CEO, Kenji Yasukawa; Chief Scientific Officer, Yoshitsugu Shitaka; Head of Targeted Protein Degradation, Masahiko Hayakawa. During the Q&A session, Primary Focus Lead, Peter Sandor is going to join. Simultaneous interpreting is available, including Q&A, but we cannot guarantee its accuracy. And this material or presentation by representatives for the company and their answers and statements in the Q&A session includes forward-looking statements based on assumptions and beliefs in light of the information currently available to management and subject to significant risks and uncertainties. Actual situation may differ materially depending on a number of factors. They contain information on pharmaceuticals, including compounds under development, but this information is not intended to make any representations [indiscernible]. We'd like to go into the presentation. Yasukawa, please.

Good morning, everyone. I'm Yasukawa. It's in December, I'm quite sure that you are very busy, but thank you very much for your allocation of your time for our R&D meeting. Page 2 is a cautionary statement. As usual, I would like to skip reading it. Page 3, this is agenda for today. There are 3 parts. I am going to make a very simple introduction. And then Hayakawa, the Head of Targeted Protein Degradation, is going to explain the important topic for today. Closing is done by Dr. Shitaka, Chief Science Officer. Now Page 5. I want to explain why the targeted protein degradation, our new Primary Focus was selected as a Primary Focus along with its characteristics. As shown in the figure on the left, this Primary Focus focuses on the biology of proteolysis and utilizes protein degradation as a novel modality to target cancer caused by abnormal proteins. In selecting the Primary Focus, as you see on the right, the prescribed criteria has to be met. The first is scientific validity. We have established a technology platform for new modality protein degrader from which we can continue to generate promising assets. So we believe that this is quite rational that we have selected this as a primary target or Primary Focus because we have such a ground. The second is the feasibility. By leveraging proficient capabilities for medicinal chemistry and manufacturing of small molecule cultivated over the years as well as our development in oncology, we are able to move forward quickly and efficiently with the individual programs. Regarding the third program -- third point of the program, the lead program ASP3082 entered the clinical trial phase this year and multiple follow-on programs are under investigation in the research phase. These points were discussed at meeting such as executive committee and the Board of Directors and the decision was made to make this the Primary Focus. We will continue to create programs from this platform on an ongoing basis and proactively invest businesses to further accelerate development. From here, the Lead of Primary Focus, Hayakawa is going to talk about the details.

Good morning, everyone. I'm Hayakawa, Head of Targeted Protein Degradation. I was involved in small molecule drug discovery research [indiscernible] about 15 years since I joined the company. After that, I worked in planning for the research division and led unit conducting research on protein degradation. And then I have been in my current position since this October. Page 8, please. This shows the key points that I would like to communicate with you. I will divide the presentation into 4 parts: the basics of the technology platform; ASP3082; the lead program, the capabilities we have and the expandability of the Primary Focus. Slide 9, please. First, I would like to explain about the basics of the technology platform. Now Page 10, please. This -- excuse me, this slide explains about the undruggable target. The left of the chart shows the difference between druggable target and undruggable target. Druggable targets have distinct binding sites suitable for inhibition by small molecule compounds through which function can be controlled. On the other hand, undruggable targets are said to be difficult targets for small molecule drugs because their function cannot be sufficiently controlled simply by compounding -- compound binding due to lack of a parent active site. It is estimated that about 80% of the proteins involved in disease are undruggable targets with the shallow binding pockets. Shown to the right, a variety of undruggable targets. Because of the difficulty in accessing these targets, treatment options for diseases associated with these targets are limited. Now Slide 11, please. On Page 11, we describe the mechanism of action of protein degrader, a new modality we use against undruggable targets in the cell. A protein degrader works by hijacking the body's natural protein degradation process that ubiquitin-proteasome system. As you see on the left, a protein degrader that consists of protein binder and E3 ligase binder and a linker connecting the two. Protein degrader is characterized by the fact that they exert their action by catalyzing the ubiquitination process rather than by binding to the target protein and directly inhibiting its function and thus, do not require the strong binding affinity of conventional low-molecular-weight compounds. As you see the right half of the slide, the protein degrader brings the target protein and E3 ligase adjacent, where ubiquitin "marked for destruction" tag is added to targeted protein. The tagged protein is subsequently degraded by the proteasome, an enzyme that selectively degrades ubiquitin-added proteins. Once catalyzed, the protein degrader is released and triggers this process again. This is assumed to allow the tagged degrader to remain in the cell and continue to degrade the target protein for an extended period of time. Through this mechanism, we believe that strong and sustained degradation effect on undruggable targets can be achieved. Now Slide 12, please. This slide shows the potential benefits of protein degraders of other modalities. Among the various modalities used against undruggable targets, protein degrader has 3 main advantages. The first is access to undruggable targets. As explained earlier, we believe that proteins that are difficult to target with the conventional small molecule compounds can be targeted because they do not require deep pockets. The second is penetrating biological barriers. Since protein degraders are not very large molecule size, they can penetrate cell brains and the blood brain barrier. And they also have excellent penetration in solid tumors where large molecules have difficulty to reach. Third is specificity. Protein degraders can selectively degrade their targets by forming a ternary complex with the target protein and E3 ligase, which may be advantageous in terms of efficacy and safety balance. With these advantages, we believe protein degraders are best suited among modalities to access undruggable targets in cells. Slide 13, please. We discussed the status of protein degrader development. In this figure, the programs that have entered the clinical phase are mapped based on the study, phase and target classification. Moving from outside to the center [indiscernible] are represented as Phase I and Phase II. There are currently 2 programs in Phase II. These are targeting the estrogen receptor and androgen receptor in breast and prostate cancer, respectively. Several other programs are in Phase I. Although it is a program of another company, clinical trial data suggesting pharmacological effects have been reported at the recent conferences and the usefulness of this modality itself is being demonstrated in the clinical trials. ASP3082, which is currently under development by Astellas, is the world's first protein degrader for KRAS mutants to enter the clinical study and is expected to become a first-in-class drug. And this is going to be explained further in the following slides. Next, please. Here is about the product potential of the lead programs, ASP3082. Slide 15, we discussed the KRAS mutation that is the target of ASP3082. RAS proteins are GTPases that regulate signaling pathways and other interactions. RAS mutations are one of the major oncogenic factors and KRAS, NRAS and HRAS are most commonly involved, especially the KRAS, the mutation frequency is known to be quite high. As shown in the figure on the right, KRAS is normally inactive or off state, but becomes active or on during cell prolification. Normal KRAS switches between these on and off states in conjunction with self proliferation that's maintaining a proper cell proliferation. On the other hand, [indiscernible] persists. This results in uncontrolled cell proliferation leading to cancer. As shown in the figure at the bottom right of the slide, there are multiple types of KRAS mutations, which are denoted as to G12C and G12D. This means that the 12th G (glycine) is replaced by C (cysteine) or D (aspartic acid) in the amino acid sequence of the KRAS protein. On Slide 16, we discuss the population of cancer patients with KRAS mutations. Approximately 1.8 million new cases of cancer are diagnosed annually in the United States. The 14.1% portion of this population shown in color in the upper left indicates that a cancer-causing target has been identified and that a therapeutic agent exists for this target. The 11.6% or approximately 210,000 people shown in pink are the patients with KRAS mutations. The light colored area is the group of patients with a G12C mutation among KRAS mutations. For this mutation, small molecule inhibitors are now on the market. Therefore, validity of target KRAS mutations and suppressing their function has already been clinically proven. On the other hand, there are still no effective treatments for KRAS mutations other than G12C and there is a huge unmet medical need. Page 17, please. In this slide, this describes the major types of KRAS mutations. There are a variety of known mutations in KRAS, but the most prominent are G12D, G12V and G12C. The 12D mutation on the left side of the figure, the target of ASP3082 is reported to occur in 37% of pancreatic ductal adenocarcinomas, 12.5% of colorectal cancers, 8% of anaplastic endometrial cancers and 4.9% of lung adenocarcinomas and it can be targeted in many cancer patients. For the G12V mutation in the middle, there are a very large number of patients. As for the G12C mutation on the right, as shown in the previous slide, an inhibitor has already been launched. And although the overall number of patients is not as large as for G12D and G12V, some reports predict peak annual sales of more than JPY 200 billion. So it is currently attracting a great deal of attention. On Page 18, let me explain the difference between G12C and G12D mutations. In general, inhibiting KRAS is difficult because the pockets to which the inhibitor binds is shallow. As was mentioned before, for KRAS G12C mutation, a small molecule inhibitor has been launched already. In KRAS G12C mutation, a highly responsive cysteine residue exists. The drug can inhibit the KRAS function through strong binding here. On the other hand, other mutations, including G12D do not have such sites, so it's challenging to create compounds, which can inhibit the function by strong binding. To address this issue, we considered the targeted protein degrader approach and created ASP3082, a compound which specifically binds to KRAS G12D and E3 ligase and catalyzes the degradation. On Page 19, I will explain the efficacy of ASP3082 by using animal model experimental data. Xenograft mice bearing human pancreatic cancer with KRAS G12D mutation was used to compare the antitumor efficacy of the conventional small molecule KRAS G12D inhibitor and the ASP3082 KRAS degrader. The small molecule inhibitor could suppress the tumor growth to a certain degree, but its efficacy was not enough. On the other hand, ASP3082 demonstrate very strong antitumor efficacy and tumor regression was observed. Based on these results, it is expected that ASP3082 can demonstrate high clinical efficacy against cancer with KRAS G12D mutation, which was considered to be undruggable target. We presented more detailed nonclinical study data of ASP3082 at an academic society meeting in October. At that time, there was a great reaction. The profile of this compound is drawing strong interest from researchers around the world. Next, let me explain our drug discovery capabilities. On Page 21, I will explain the history of related research Astellas has conducted by now. First, in the 2010s, we started our research aiming to generate conventional KRAS mutant inhibitors. It was technically difficult to create binders that binds specifically to KRAS mutants such as G12D but we identified proprietary KRAS mutant binders based on Astellas' historical small molecule capabilities. Independently from this inhibitor research, we also started protein degrader research in the 2010s. Through this, we built various technologies for drug discovery using this modality. By combining these 2, we started a research on KRAS G12D degraders in 2020. Since then, as is shown on the slide, this has advanced at an unprecedented speed as a compound aiming to be a first-in-class product. In just 5 months after the start of a research, we identified ASP3082. Furthermore, after selecting ASP3082 as a new drug candidate, we achieved IND submission in just one year. On Page 22, let me explain the capabilities we have developed in creating ASP3082. Until the creation of ASP3082, there were 2 major challenges. The first one was to bind the compound to POI, a protein target. The second was to enhance the efficacy so that we can achieve sufficient inhibition of function. It took quite a lot of time and efforts to create a compound, which binds to KRAS G12D mutant but we were successful by leveraging our capabilities for small-molecule synthesis, which we have been good at from before. On the other hand, even if a binder can be created, due to several binding pockets of targeted proteins, we couldn't achieve sufficient inhibition of function. So by using protein degrader as a modality, we enhanced the efficacy successfully. The upper and lower parts of the diagram, are the capabilities we have developed through this process. First, we have proprietary binder compounds against KRAS mutations. We can utilize capability technologies in chemistry synthesis to create binders for expansion to other targets. I will explain this later. But regarding the E3 binders, in addition to the one created by Astellas on its own, we also acquire next-generation technology through partnering. At the bottom, you can find examples of the technologies we utilize in drug discovery for this modality. It's not just enough to create a targeted protein binder, an E3 binder to be connected with the linker. It's important to optimize the structure, including the 3 parts. In addition to the conventional chemical synthesis, we can leverage robotics and AI algorithm. We also have state-of-the-art modeling technology and highly efficient molecular synthesis technologies as well. By combining these, we can create optimal targeted protein degraders quickly and efficiently. On Page 23, let me explain the process to create ASP3082 as a specific example. The modeling system we use to generate ASP3082 is unique as it's an integration of researchers, expertise and computer modeling. Usually, it takes multiple years to optimize for small molecule drug discovery but only 5 months were required to identify ASP3082 successfully. As is shown in the diagram, we started optimization [indiscernible] compounds and the 38 compounds we synthesized was ASP3082. Given the fact that in usual optimization process, synthesis of hundreds to 1,000 or even more compounds is necessary, we were able to create a new drug candidate very efficiently with less steps. By leveraging the capabilities we have accumulated, we think we can create new drug candidates in a short period of time in our follow-on programs and can expand our pipeline continuously. Last but not the least, I will explain the expandability of this Primary Focus. As is shown on Page 25, various applications can be possible with regards to the targeted protein degradation technologies. By converting POI binders in line with different purposes, it will be possible to access various targets. And also, by modifying the design of E3 ligase binder and linker, we can aim to enhance the power of degradation and strengthen functions such as tissue specificity. In proceeding with these, we will not just depend on our own existing technologies, but we will also actively combine them with external capabilities. Next, Page 26. Let me explain the direction of our partnering. As I mentioned on the previous page, we are considering 2 directions: expandability to various target proteins and to strengthen functions by design, modification of the entire modality, and we are exploring partners actively in both. We already have a partnership with FIMECS, which are synthesis platform for efficient protein degraders and cancer-specific E3 ligase binders. We'd like to use the state-of-the-art technologies and aim to create next-generation protein degraders. We'd like to expand partnering in the future, incorporate external capabilities and further enhance our competitive edge. On Page 27, I will explain our overall strategy for this Primary Focus. As the first wave, we will aim for the launch of KRAS targeted protein degrader. In addition to ASP3082 targeting G12D mutant, programs targeting other KRAS mutants are also ongoing. As the second wave, we will utilize both partnering and our own technologies to expand to oncology targets other than KRAS and promote the creation of next-generation protein degraders. Furthermore, as the third wave, we will aim for expansion to non-oncology targets, such as immunology and other target diseases. On Page 28, let me explain the current pipeline. Regarding our lead program, ASP3082 Phase I study, monotherapy dose escalation part is ongoing with data readout expected in FY 2023. For KRAS G12D mutations, we are studying a backup compound in parallel as well. The next program we are considering is pan KRAS degrader, which is the third one from the top. Pan KRAS means various KRAS mutants. We are discussing this as a compound with the potential to be applied to a broad range of patients. A lead program is now in the IND preparation phase, aiming for IND submission in FY 2023. We cannot disclose the details. But as the second wave, we are also working on cancer-related programs targeting non-KRAS proteins, including 2 collaboration programs with FIMECS. Also, for non-cancer diseases in the third wave, we are conducting exploratory research. We're working to generate continuous programs broadly from initial stage of research to clinical stage in this Primary Focus as a whole. That's all for me. Lastly, Chief Scientific Officer, Yoshitsugu Shitaka, is going to explain from the viewpoint of our research, new organization structure.

Good morning, everyone. Shitaka, Chief Scientific Officer. At the end of our presentation today, as the background leading to the creation of this new Primary Focus, I'd like to explain the changes brought about by the new research organization structure we implemented in the last fiscal year. Page 30. By modifying the research organization structure in October last year, we changed the structure from functional-led hierarchical structure to objective-based agile organization shown on the left. We created an agile organization by objectives, such as immuno-oncology and targeted protein degradation, assigned researchers [indiscernible] expertise and delegate authority. We wanted to change mainly the 3 things shown in the middle. Mainly the speed of decision-making, mentality and behaviors of our researchers and timely decision for investments. One year has passed since the reorganization. We're feeling the great effect of changes and improvements we wanted to realize occurring in a research organization as a whole. First, our daily decision-making has become much faster. In a flat organization, researchers' original ideas and ambitious plans have been proposed and shared. In the ASP3082 creation process, breakthrough proposals and decisions were made on site by those in the research labs rather than by top-down. Mindset change spills over from research to manufacturing and clinical development divisions as well, resulting in entry into clinical trial in a record time of just one year from the identification of a compound and our promotion of ASP3082. In my capacity, investment effects are much more visible in each objective, so we can change the allocation of our investments in the agile organization now with the performance even during the middle of our fiscal year. In reality, we have checked the progress of our research on targeted protein degradation at an appropriate timing, judge the potential and expanded investment flexibly. As a result, as we presented earlier, ASP3082 achieved the world's first IND by targeting KRAS G12D. Also, we were successful in creating multiple promising follow-on programs to accelerate the primary focus selection this time. In the R&D meeting last year, we told you that we are adopting the framework where an organization can grow or may be shrunk according to its performance, the organization to execute targeted protein degradation has gone from a small venture unit to a research engine to promote the Primary Focus. Going forward, we will more significantly delegate authority and reinforce investments in this area so that we can further accelerate our research and generate programs continuously into the future. This concludes our presentation. Thank you very much.

This is all from us. Now we would like to entertain questions from your side. The questions are entertained only from the Zoom Webinar, but from the live streaming. [Operator Instructions] And this time [indiscernible] Primary Focus leader, Peter, is attending here together with us. So sometimes the answer will be in English. [Operator Instructions]

First question is Mr. Yamaguchi from Citigroup Securities.

Can you hear me? I'm Yamaguchi from Citi.

Yes, we can hear you.

I have a couple of questions here. First of all, this research team group or the members of this research group. Basically, those are all internal people? Who are the members of this research group? Are they all internal members?

Yes, that's right. They are all internal employees and the members. But of course, the external capability is utilized. So we have these double approaches.

And also you have 3 factors. This will be too simplified way, but the binder to the target protein A3 and in between, you see the linker. I think each of them is, of course, important, but which one shows you the most difficulty? And for making it a platform from, of course, the left is going to be changed every time, but the right ones, E3 linkers, they have to be always generated in a very different types. And in order to expand this project, you have to go through such process each time?

Thank you very much for asking your questions. I think you point out, it's quite important. What is important is the components that is about the left side and also the right side that is connecting A3 and the binders. So both are very important components as I said. And for each of them, sometimes it differs depending on the programs, but it is necessary to have such capabilities. What is the common capability that is assembly -- assemble all these components, but we have good at for modeling and expertise, we have those as a common platform that we can use. Thank you very much.

Lastly, for the future in this area, various companies are making their reports in the field. Competition is going to intensify into the future, and you're doing your development and research circumstances, particularly the ASP3082, the initial asset. With the speed to reach the market. And this is going to be very important for the expansion of the franchise into the future. Are the drug combinations used in Phase I study? In pancreatic cancer, I think, initially in which tumor types are you going to use in initial studies? What's your tumor type strategy because competition is going to intensify?

Regarding 3082, CRC is the initial target. But also, as you can see on Page 17, higher onset pancreatic cancer, CRC and ductal cancer, lung cancer, ovarian cancer and also the uterine corpus cancer, we'd like to consider.

Next, Credit Suisse, Mr. Sakai, please.

Sakai from Crédit Suisse. This might be 2 simple question, but Phase I, that is often label study with the 270 subjects. I think that's a relatively reasonable size. And looking at the 3082 alone, or this is the undruggable world. So what's your focused expectation about the probability of success that you had.

3802, probability of success is your question?

Yes.

Well, yes, it's an undruggable field, but the pathological involvement, we believe this is the target with high level of the evidence. So we believe that this is quite gradable and degradation level is quite high. So we have a high probability of success ahead -- set.

I see. But I think, of course, internally, you look toward the level of the success, right? But for example, if you refer to Page 28, some information is disclosed. But regarding the sense of the speed, are you going to wait for the result of 3082? I believe you are working on a backup program as well. But other than those, you mentioned you are going to put the resources further. So in an earlier phase, how you would shift toward a Phase I? Do you have such a plan? And what's the -- to what level of the speed, sense of speed you apply for this?

Well, without waiting for the result of 3082, we work for the follow-on projects one after another. 3082, the optimized study is finished after just one year, 3082 got into the clinical phase. So that is the level of the speed we are thinking about for follow-on products because this field is quite competitive.

Sakai, Yasukawa speaking. Regarding the first question, let me make additional comments. Slide 12, if you refer to. There are 3 benefits described here Biology, ubiquitination is introduced and that is quite a robust. But of course, compared to the ordinary low molecule weight compounds, the molecule weight is larger. So production side, well, when we adopted this thing as Primary Focus, the middle one is the focus efforts really penetrate into the tissue, although it resides within the vessel or before getting the tissue, PK goes up or not. Those were part of the concerns that I had. But looking at the result of the initial clinical trial, it was confirmed that it was absorbed and distributed systemically. So the first hurdle that so it was the highest among this project, we were able to -- what we were able to overcome. But of course, we have a backup for the preparation. If Phase I went much further and we can learn about the level of the concentration if that achieves the targeted level. If the target level of [indiscernible] is achieved, we would not think about to follow -- we would not think about the backup.

On Page 19, compared to inhibitors, was this published. What is the comparator? Would you like to explain here, as you pointed out, what is compared against what?

Directly. Yes, I understand your point. Inhibitors are used as a component to develop [indiscernible] work as inhibitors. And also, the degraders were compared against inhibitors. As for the inhibitor part, 30 milligram oral BID almost to the limit, it was dosed. Still, tumor could not be controlled sufficiently but if you add the degrader function, tumor was almost cleared by injecting twice a week [indiscernible] tumor shrunk. So that's the comparison here. Sorry to say this, but you didn't expect a lot of efficacy here in this model to begin with. Going back to the history, originally, we were doing inhibitor research with a lot of focus in Italy compared to the companies from the initial stage, we identified inhibitors. But how we can optimize and even if you optimize tumor in vivo model, did not demonstrate sufficient efficacy. We had such a long time in research. We switched to degrader profile, then we were able to accelerate.

Next, JPMorgan Securities, Mr. Wakao, please.

Wakao, JPMorgan. First question. So these protein degraders developed by other companies as well. And looking at the technologies, what's the difference of the technologies between other companies and yourself.

Thank you. First of all, asset, KRAS, as you see on the screen, we have various types of the target possible because we have such [indiscernible]. Therefore, we can have a variety of the approaches that can work on others than KRAS as well. And 3 components assembly, design is a very special technology base. So that is what we have great confidence. And the other part that is expanding these days is E3 binder technology, on top of the ordinary binders, but also we have our original binders and from the FIMECS as well, they have a very interesting unique technology. So we would like to expand this further. And that's the difference of us from others.

Against the target, as you explained, you have to tune up. It's difficult to compare the technologies just simply, correct?

We have these technologies, and it's difficult to make an apple-to-apple comparison, but we have chemical drug discovery activities, and we accumulated our design and manufacturing capabilities and technologies can be said something very good.

Secondly, on this page, in the end, the initial target is undruggable. But this time, what you have is having a binding. The thinking behind here, it can bind, but it's not as much as to show inhibitory effect. So E3 binder, that's why you have a degrader. Regarding the binding sites or binding barrier, the binding capability is not so high, but by having this, it's supplemented. How is it being bound?

Thank you for the very important point. In the case of degrader, the binding can be very weak, which is enough. That's the difference compared to the usual small molecules. It's like a keyhole, it's like to insert a key to lock to inhibit the function with a small molecule. In the case of degraders, protein A to target degradation and ubiquitination in protein B, it can be close to each other. That's enough. In the case of degrader, there can be just week binding with each other. So binding is very different compared to the conventional ones in terms of the science.

So in line with that, well, if the specificity is low, it sounds like it binds various variable places. And therefore, E3, it is very important to show the specificity. And the first program, I just wonder at the level of the specificity. And you mentioned there are various types, but what is the current expansion reach?

Thank you very much for specificity. To put it in a simple, the specificity is said to be quite high compared to the low molecule products and activator, as me mentioned, they lock with the key, that is a very limited interaction where you have to come up with the specificity. And within the body, there is the same type of philosophy is applied for the key and the lock. But -- so that's why the specificity is very difficult to achieve. But this time, the protein degrader, protein A and B are shaking each other and AB surface or interface contact in a wider area. Therefore, generally speaking, specificity is likely to be high. On top of that, as has been pointed out, this is quite an important point. This A3 binder, this protein, there are more than 600 kinds within our body. For example, some are specific to cancers or specific to some tissue, and they are known. So we can make use of them to realize the required specificity or improve the value of the [indiscernible]. One additional comment. 3082 specificity [indiscernible] utilized. And so selectivity is very high. It's a degraded KRAS G12 D alone. That's confirmed with our experiment.

Next fiscal year, the initial part is going to complete for 3082. Are you going to show us the data next year, in the next fiscal year, Peter? What is the current status of Phase I study, please explain, Peter.

The current Phase I study is in dose escalation. We expect the data out of the first phase in fiscal year '23. And this will guide us into the next step of the program to decide on which tumor types to develop it further and how to expand the monotherapy and/or combination. We have decided at this point then and there to disclose the data likely be disclosed at the academic meetings or conferences.

Next, Schroders Investment Management. Mr. Sato, please.

I'm Sato. There are some -- a couple of questions. First of all, from the scratch, you started the research and it's been only 2 years and 3 months to achieve the first in patient. I think this is unprecedented speed. Why was this modality at this speed was achieved? Is there any background that you can share with us for this quick achievement?

Thank you. From the identification of compound IND, it took one year. This is very fast. This is the shortest -- record short for us as well. We conducted several studies in a parallel manner, we took risks. That's one of the contributor for this. For optimization, as has been repeatedly mentioned, we have accumulated know-how for that and also modeling the accuracy for that is extremely high. So the forecast or prediction of the modeling achieved a very high accuracy level. That's another reason. Right. From the perspective of actual research field, as mentioned a little while ago, agility is high and flat and objective wise, organization was established. That contributed a lot that you're making was quite quick. So within the organization, the decision was made quickly and internal/external collaboration went so in a speedy manner. That's why we were able to accelerate the speed from the research to IND.

Yasukawa. Let me make additional comment. On this Page 38, 38th compound is what we achieved, but we wanted to have that the computer technology. So one year from 3082 discovery to IND. And this is actually based upon my request. Low molecule compounds and synthesis experience is so much accumulated internally. What is done then what is triggered. There is such kind of a role internally. So if you just follow that, yes, we can minimize the risk, but it would take a lot of time. So it shouldn't be in that way all the time. Once the promising thing is identified or when we have to win the competitor. We shouldn't think about only the low-risk approach. When we find something good, we have to take risks and the several [indiscernible] should go on in a parallel manner to achieve the IND in a shortest time. That's the recourse that being placed into the research people. And that was achieved with this team. So this is a good precedence for us. So same thing could be applied for the following, good compounds if those are identified. So this brings the confidence to other teams as well to the company as a whole as well.

And also, the delegation of authority to people in the field by reorganization and taking risks to have programs in parallel, if that's the background, not just in this modality, but for others as so I think you can apply this to other areas as well. What do you think?

Yes, your understanding is correct. There is a change in such a mindset for the entire research and also for the entire company. It's spreading now. So this is going to be a very good precedence so that we can have a great sense of speed for the follow-on programs as well.

I'm checking that. Once every 3 weeks, IV infusion, once it's bound it's going to be released and then go back to bind to the receptor with one dosing, the efficacy is going to last for a long time with one dosing?

Yes, you're right. One week IV administration. But as you said, it's a protein degrader, KRAS mutant would be gone completely. It takes time to regenerate. So the efficacy would be prolonged. And also the distribution of the drug in the tissue cancer, it's superior compared to the conventional small molecules. And that's why we can use this kind of a dosing regimen.

Peter, when you wrote the protocol, how did you determine the dosing frequency? And according to the data you have by now, once a week dosing seems to be good or not? What do you think? Anything you can share right now?

It was designed based on the preclinical pharmacology data. And what we have seen so far confirms the preclinical experiments and expectations completely. So right now, it seems that we are on the right dosing schedule and frequency as well.

It is the 21-day cycle. This is once-weak administration. And after that, you will have the drug holiday. That's the image of the administration cycle?

Current clinical study design.

And Phase 1 primary completion date that is 2026 March. It's a bit far ahead, but the first part is planned to be completed in the next year. So I think you have a bit of the leeway for your scheduling? Is there any background for that? Is there any reason for that?

So the primary completion they described the time when the all the patients have been dosed and followed up for the predefined areas. As we mentioned earlier, we expect to finish the dose escalation next fiscal year and we will have safety information about the drug and then we will have the dose for the next phase of the clinical study. Our expectation is that we will start to see the first proof-of-concept type data in the fiscal year time for '25 time frame.

Next, Morgan Stanley MUFG Securities, Mr. Muraoka, please.

Muraoka, speaking. Listening to the presentations and discussions today, undruggable target, it can be used for an undruggable target. I now understand it clearly. But other drugs you gave up -- because of the lack of efficacy or insufficient blood concentrations, you can renew such drugs. It's like a dream. Is it possible to take such a strategy?

Yes, you're right, KRAS and others, there was a pipeline table, it's undisclosable but in the background, you can find very well-known targets. In terms of the disease biology, these are targets with a high probability, but we couldn't produce. But we would be able to produce. And once you are able to produce, it's going to be very efficacious. So we're trying to address such targets.

And your partner, FIMECS, that's Takeda's spin-off company, right? This is my own imagination, but within Takeda, these are not discovered. But with the partnership with Astellas, the development is taking place in a very interesting manner. That's out of my imagination. But is this understanding right?

Well, I don't know if this project is not emerged in Takeda or not. But of course, it's a spin-off and FIMECS has a technology of [indiscernible]. And this has a very synergistic effect with our projects. So we have a high expectation on the collaboration with them.

Well, within Takeda, did you think that this is a good company and technology, but it was unaccessible. So the spin-off timing was most appropriate and optimal for you?

Yes, we understood in that way.

My last question, I know this is deviating from today's team. But any comment on the success of Zolbetuximab?

Yasukawa speaking. Zolbetuximab, as you know, it was originally something we purchased from a European venture. Before our purchase, they had a small size Phase II study. A few years ago, there was an impairment loss. You may remember this initially just with that Phase II, we wondered whether we can file for accelerated approval. That was the level of the results. It was a small-sized study and the study itself was mainly done in Eastern Europe. So just with that data, we thought we could not file our submission. If you want to accelerate its submission, if that was possible after filing after conditional approval, confirmatory study was to be conducted. That study is now being done a Phase III study. So personally, Phase II data, I think it's going to be reproduced. That was my belief. And we have such data exactly as I thought. So these are the results we expected. So there was no surprise about the results. That's the situation right now. The other one will be at the beginning of next year. It's an event-driven study. So we are trying to count down in the final stage. Once we make a decision, we make the announcement. You were able to reproduce the results. In the previous Phase II that ratio, 0.4 or 0.5. This was great. And the results are comparable. Regarding the study was already available results, yes. The study results once available, will be reported to you. Thank you very much.

Next, Mizuho Securities. Mr. Tsuzuki, please.

I'm Tsuzuki from Mizuho. Can you hear me?

Yes.

Thank you for the presentation and explanation. This is a quite interesting. So I would like to ask you a question about the rate limiter for this degrader. So you make the target the protein linker and also E3 ligase, I think these 3 are important components. So out of these 3, which is likely to be the highest bottleneck rate limiter? Of course, it differs depending on the project. But regarding this ASP3082, for the optimization of the linker Page 23, you have to go through the fine-tuning process or the identifying the target protein became the limiter? So what was the limiting factor for this project? And what is likely to be the future led remitting factor? This is the first question.

That is a very important question. Thank you very much. KRAS G12D degrader case. Well, as it's been pointed out in my presentation, the left side, that is the original G12D binder, making that took a longer time. But the process afterwards like assembly and so the part of E3 binder, that matches quite well and ultimate molecule establishment was considered based upon our design technology, so it was accelerated. But just like you pointed out, it's case by case. For KRAS, currently, we have mostly the sufficient binder set. Therefore, in accelerated manner, that degrader is likely to be established. And regarding the assets other than KRAS, again, for a longer time for the chemist or the small molecule binder research has been long ongoing, so we can make use of that. And I think we will have other project designated as undruggable. In the case it would work for them as soon as possible so that we can gain the new interesting asset.

One more question about the linker. If I'm wrong, please correct me. E3 ubiquitin ligase -- so what is the revenue in the protein is going to be important. So on Page 23, on the first compound you created cysteine residue was a rate limiting factor? You have a lot of assets in your pipeline and you can solidify your know-how and you can be faster for the future. I'd like to know more.

Thank you for the very deep question. We don't know everything in science yet, but cysteine residue, ubiquitination is done in parallel as well. The speed of ubiquitination is very fast, that is repeated. And it goes into degradation. And it done in reversal fashion. We are assuming such a catalytic mechanism. I don't know how much I can say. But what's important is the target protein, POI and E3 ligase, they must be brought about to be adjacent and close to each other.

One more question. Another is a selection of the binder. So those cannot be either antagonist obtained by the major pharma, mega pharma. So mega pharma has the favorability in this project. So also you are thinking about the collaboration with the company with having the most optimized binder for the next project, I think, logically, I think that will be either way.

Well, thank you very much. It seems that you are covering our intention already. What you pointed out is quite right. Therefore, not specific to internal development, but we are always looking for the attractive partner. That is going to be quite important.

Next, JPMorgan Asset Management. Mr. [indiscernible], please?

Can you hear me?

Yes, we can hear you.

I have a few questions. First of all, to begin with, E3 binder, ubiquitin ligase. If you change the types of ubiquitin ligase, POI target protein could not be degraded well. So which ubiquitin ligase to be selected? Such know-how is already available in your hands? For KRAS, I'm sure you know this already. But depending on the targets, ubiquitin ligase, what would be degraded in ubiquitin ligase? There are still some things you don't know yet?

Thank you for your question. We have not understood everything yet. Regarding KRAS, easy binder. What types should be the best to be combined? We have such information. But with modeling, we can get some information to a certain degree. And also tissue or disease specificity could be achieved with certain E3. And also molecular design would tell us certain information, but you have to give it -- we have to go through a trial-and-error process still.

Understood. If that is the case, you mentioned that there are about 600 kinds -- and they are always existing in our cells or depending on a cell [indiscernible] sometimes not available?

Thank you for the question. You are right. Depending on the cell, there are E3 available, E3 not available. So there is a localization taking place. So there is a tissue you would like to degrade or the status of the pathological status, you can degrade, I think that kind of approach will be available.

Understood. If so, then when, where it is localized? That kind of information is now available?

Yes. Including our [indiscernible] we collect the data and strategically a reasonable combination is what we are always thinking about.

If that is the case, then this ubiquitin ligase that is targeting a certain cell, but the ubiquitin ligase is not available for a certain cell, not available in other cells. Therefore, even with this technology, it's very difficult to target? Or if you work on in a creative manner, then the ubiquitin ligase that you would like to target exists within cell and whatever shape it will be right? If you look at the certain cell and if you like to degrade a certain target, then some optimal one is available somewhere. So we can find something. Of course, the selection is important. Again, there is know-how and you have to explore well in this field. It's not going to be one important area?

Yes, you're right.

Next, [indiscernible] please.

Thank you for the great presentation today. KRAS targeting is the topic I'd like to ask a question about. [indiscernible] in the presentation, there was a mention [indiscernible] already launched into the market. This summer, Phase III data was published as well. As a target, KRAS G12C mutation, so the target is different. And as you said, target is NSCLC, it's different, but still the pharma industry and scientific community have rate expectations to target KRAS. As the clinical data, the efficacy was not achieved compared to what was expected. I think that's the overall view. Reflecting this [indiscernible] penetration in the market is not so fast in the actual market KRAS target. I understand the difference is based on this. Why [indiscernible] has these results? And for you, there can be a different clinical impact you may be assuming, I'd like to hear your view.

Thank you for the question. That's something we carefully watch. As for [indiscernible], it's an inhibitor. First of all, [indiscernible] inhibitor. Ours is a degrader. In terms of efficacy, the target protein is eliminated or degraded. So we can enjoy the benefit because of this, that's our expectation. On the other hand, can we realize those expectations? There is still some uncertainties [indiscernible] is faced with issues like resistance occurring in a variety of ways. And we have follow-on programs we'd like to refine on combination therapies. And the strategy for that are going to be very important as well.

Thank you very much. We have a couple of people still waiting for asking questions, but it's time with this, we would like to close this meeting. Everyone, thank you very much for your attendance. This is the end of the translation service. [Statements in English on this transcript were spoken by an interpreter present on the live call.]