Daiichi Sankyo Company, Limited (4568) Earnings Call Transcript & Summary

Thank you for waiting. We are now ready to start Daiichi Sankyo's Interim Business Briefing. [Operator Instructions]. Dr. Manabe. Please go ahead.

Hello, colleagues. This is Sunao Manabe, CEO of Daiichi Sankyo. Thank you very much for joining Daiichi Sankyo's ENHERTU Business Briefing during your busy end of every month's time. Over the last several years, we have presented a lot of information and have many discussions with the investment community around ENHERTU, previously known as DS-8201. After January 2020, when we launched ENHERTU in the U.S., our presentations and discussion started to include commercial information around ENHERTU. I am very happy that now we are able to help breast cancer and gastric cancer patients with ENHERTU in multiple countries. And through that, we should set up an event for investors with a focus on the business side of ENHERTU. Please move on to Page 3. Well, this is a slide that I presented back in April over this year when we rolled out our new 5-year business plan. Our 2025 goal is to be Global Pharma Innovator with a competitive advantage in oncology. And one of our targets in 2030 to be global top 10 in oncology. Let's go to Page 4. This slide shows the 4 strategic pillars for our 5-year business plan. Pillar #1 is to maximize our 3 ADC. We have multiple ADCs in clinical development now and expect the first 3 ABCs to contribute to our current 5-year business plan commercially. Of course, ENHERTU has already started making solid commercial contribution to our consolidated business, as I presented earlier today. We'll see Page 5. This slide shows some image for our oncology revenue target during the current 5-year business plan while our second ADC, Dato-DXd as well as our third ADC, HER3-DXd are both expected to contribute commercially before 2025. They have to be the key to our commercial success. Now let's go to Page 6. The next 4 pages are the slides we presented last month after ESMO. This slide shows our current clinical development plan for ENHERTU in breast cancer. We will not provide any update around clinical development today. But as you can see, we have an aggressive plan to help many more breast cancer patients with ENHERTU. Next is Page 7. We're already helping gastric cancer patients in Japan and the U.S. with ENHERTU and planning to help more gastric cancer patients in more countries. The clinical data that we are accumulating for ENHERTU in non-small cell lung cancer looked quite encouraging as well. And we are now refining our strategy to gain additional indication for ENHERTU in NSCLC. Let's see Page 8. This slide shows our plan to help patients with other types of cancers, including colorectal cancer. The clinical data we are accumulating in this area also looks very encouraging. And we will continue to work with our excellent partner, AstraZeneca, to deliver ENHERTU as many cancer patients as we can. Let's go to Page 9. The slide shows data from the Phase III head-to-head DESTINY-Breast03 study against T-DM1, which was future at ESMO Presidential Symposium last month. At the [indiscernible] interim analysis over the study, ENHERTU demonstrated a 72% reduction in risk of disease progression over that compared to T-DM1, which is currently the standard of care for HER2-positive breast cancer second-line treatment. We are very encouraged by the data. We see Page 10. As we were working on a new 5-year business plan, we felt the need for some changes around organizational structures. One of the high priority needs were to align U.S. and European oncology businesses, as well as global oncology business function under one team to respond to the rapid changes we see in standard of care and the oncology market. We therefore decided to reorganize the U.S. and European business unit, integrated the global oncology business functions and created oncology business unit. We looked at both the internal and external candidates to lead this new business unit. While we looked at much for external candidates, it was eventually clear to me that Ken Keller who will present after me today is the best. He knows everything that we need, especially the leadership to maximize ENHERTU and the other oncology products for Daiichi Sankyo's growth. You will recognize that once you hear his presentation. This is all from me for today, and I will pass the button to Ken. Ken, you're up, please.

Manabe-san, thank you very much for that kind introduction. If you can go to Slide 12, first, I want to thank you for your interest in our Daiichi Sankyo story. Today, I will share with you the progress we are making in building a leading global oncology business. The Oncology Business Unit works collectively as 1 team hand-in-hand with the rest of Daiichi Sankyo across research, development, manufacturing and our other teams. The Oncology Business Unit's purpose is as follows: as my teammates in research and development translate our Daiichi Sankyo science into evidence, the OBU will turn that evidence into real-world practice. Our ultimate scoreboard is the number of patients we help live longer, better quality lives through our antibody-drug conjugant science and technology in our communities all across the globe. Next slide, #13. This is our Oncology Business Unit leadership team. The key points to remember are this is a diverse team. It represents geographies across the globe, and it couples external experience with our top internal Daiichi Sankyo talent. What's been very satisfying is that the potential of ENHERTU and our antibody drug conjugant platform has allowed us to attract top talent from across the oncology marketplace. Moving from left to right, Dr. Mary PinderSchenck is our Head of Global Oncology Medical Affairs. Prior to Daiichi Sankyo, Mary led the U.S. Medical Affairs teams at Merck Oncology and most recently, Kite Therapeutics. Mary is also a board-certified oncologist trained at MD Anderson. Dan Switzer is the Head of our U.S. Oncology Business Division. Dan has held numerous leadership roles at Daiichi Sankyo over 17-year career. With the importance of our AstraZeneca partnership, Nag Hamahata leads our Alliance Management team and he is a top internal talent here at Daiichi Sankyo. Rich Jones leads our Global Oncology Business Strategy & Analysis team. Rich joins us from Celgene and Bristol-Myers Squibb, where he held a number of key commercial leadership roles. Nadine Sprangers is our Head of Market Access & Payers. Nadine led our Daiichi Sankyo European Access & Pricing organization. We see the European pricing and access environment as most complex and a place that other parts of our organization can learn from. Dr. Markus Kosch is the Head of our European Oncology Business Division. He joins us from Pfizer Oncology where he held a number of key leadership roles, most recently heading up a large part of Pfizer's market-leading CDK4/6 programs. And Kenji Shigeta is the Global Head of Oncology Marketing. Kenji has been with Daiichi Sankyo for over 20 years. He has held global leadership roles with edoxaban and Effient, and most recently, Kenji was the Head of Alliance Management. Next slide, #14. The bold ambition we set forth is to significantly change the treatment landscape of breast cancer and lung cancer with other cancers to follow through our revolutionary antibody drug conjugant science and technology, and transform Daiichi Sankyo into a recognized global leader in oncology by 2025 and one of the top 10 oncology companies globally as measured by revenue by 2030. We are very pleased with the rapid progress we have made advancing our antibody drug conjugant science and turning it into evidence. And based on the evidence we have already generated with ENHERTU, Dato-DXd, HER3-DXd and DS-7300, we are confidently pursuing development plans designed to displace the current standard of care in advanced and then earlier stages of breast cancer, non-small cell lung cancer and gastric cancer. With ENHERTU, we aim to become the new standard of care in the third line, then second-line HER2-positive metastatic breast cancer setting, then we believe we can fundamentally transform the treatment paradigm by bringing the remarkable efficacy of ENHERTU in patients with high unmet needs, where all existing HER2-targeted drugs have failed, specifically the large HER2 Low Patient segment. Our development program will eventually lead to advancing ENHERTU into earlier treatment settings like the neoadjuvant setting where cure is the goal. The first indication we're pursuing with Dato-DXd is metastatic non-small cell lung cancer patients without actionable genomic alterations. Recently, we announced that we will conduct a global Phase III trial called TROPION-Lung08 that will evaluate Dato-DXD in combination with KEYTRUDA compared to KEYTRUDA alone in treatment-naive metastatic non-small cell lung cancer patients with PD-L1 high expression without actual actionable genomic alteration. There is a robust life cycle program of mono and combination trials targeting both lung cancer and breast cancer, and we look forward to sharing more about these plans in the near future. With our HER3-DXd, we have embarked on a fast-to-market strategy with EGFR-mutated metastatic non-small cell lung cancer patients who have progressed on osimertinib. Osimertinib is the standard of care and over 250,000 patients have been treated in 2021 alone according to AstraZeneca. And ultimately, all advanced disease patients progress. At ESMO, very promising data from our fourth DXd ADC DS-7300 was presented. It's important to note that each drug shown on this slide is backed by a robust life cycle plan, including investment in multiple combinations with I-O therapies and other modalities that aims to maximize patient outcomes and importantly, deliver new business growth catalysts for years to come. Altogether, today, we are conducting clinical trials that have the potential to deliver approximately a dozen standard of care changing new indications and/or new drug approvals in the next 5 years. In the progress we have made to date, you can see a couple of important things. Number one, the boldness of our strategy as evidenced by the recent head-to-head trial results of DESTINY-Breast03, and number two, the conviction we have, along with our excellent partner, AstraZeneca, for ENHERTU and Dato-DXd to maximize the benefits of these ADCs through our robust life cycle plans. Next slide, Slide #15. ENHERTU is the foundation of our oncology franchise. I don't think it would be possible to choose a better drug to start building the Daiichi Sankyo Oncology Business with. Both Daiichi Sankyo and our partner, AstraZeneca, see transformative potential in this medicine. And together, we aim to redefine what good and even great looks like in treating HER2-positive patients and to transform how the oncology community thinks of treating HER2 cancers. Now our ENHERTU growth strategy consists of 4 pillars advancing sequentially. Step one is to establish the solid foundation with the first third-line approval in HER2-positive metastatic breast cancer, which we have done successfully in Japan, the U.S. and selected countries in Europe. And I'll provide you with a status report in the next few slides. Step 2 is to accelerate our global launches and displace Kadcycla T-DM1 as the second line standard of care based on the DESTINY-03 results and approvals. We are prepared and confident we will deliver this in record time. Step 3 is fast approaching as we prepare for the DESTINY-Breast04 HER2 low data in the first half of 2022. Now based on this new indication, ENHERTU will potentially transform the treatment of what today is called HER2-negative metastatic breast cancer. This is a significant opportunity. More than half of all metastatic breast cancer patients fall into the HER2-low category. Other HER2 drugs have tried and they have all failed to benefit this population. Step 4 is to advance ENHERTU into earlier disease settings as monotherapy and in combination. We believe the remarkable efficacy of HER2 in earlier disease settings has the greatest potential to alter the course of treatment outcomes. These 4 ENHERTU growth pillars will change the standard of care across the treatment continuum and deliver a consistent stream of growth catalysts for the next decade. Next slide, Slide #16. Now let's move to an update on ENHERTU performance launch to date. ENHERTU is now approved in 37 countries. These were accelerated approvals based on the DESTINY-Breast01 single-arm trial which showed a 60% overall response rate in heavily pretreated patients and a progression-free survival of over 19 months. Impressively, as this trial matures, the data continues to impress. At ESMO 2021, these results were updated and we reported overall survival was well over 2 years at 29.1 months. The response from the oncology community has been outstanding. ENHERTU is the #1 prescribed drug in the third-line HER2-positive metastatic breast cancer setting in every country where it is fully launched, and this includes the U.S., Japan, the U.K. and France. So I'd like to talk about the results first in the United States. We are pleased with the commercial capabilities we've built and the competitive performance of ENHERTU in the United States. ENHERTU has established itself as the third line market share leader. This market share leadership has strengthened in the past few months prior to the ESMO data release. Our latest estimate is that the third line market share in the United States is over 40%. And we believe this increase is a result of oncologists becoming more comfortable and more confident in managing ENHERTU based on their own and their colleagues' experiences. The United States oncology community now expects to place 2/3 of their future third line plus -- so third-line and fourth-line patients on ENHERTU. And I just want to remind you, that survey was prior to the ESMO DESTINY-Breast03 release. In Europe, HER2 is the #1 market share leader in the third line HER2-positive metastatic breast cancer space in France and in the United Kingdom. We have recently launched in Austria, Denmark, Finland, Norway and Sweden with more countries to join soon. Demand sales grew 31% in August versus July. And now there are approximately 1,000 patients that have been treated with ENHERTU in Europe alone. Now this is a limited set of countries as access is constrained as a result of the accelerated approval being based on the single-arm DESTINY-Breast01 data. The expected forthcoming approval in the second-line setting based on the DESTINY-Breast03 data which compares ENHERTU to T-DM1 Kadcyla, which is the gold standard of care changes this. And we are confident ENHERTU will obtain full access in all countries we operate in rapidly once approved. Next slide, Slide #17. Now this brings us to the recent ESMO meeting in September. I think most in the oncology community would agree that the star of the meeting was our ENHERTU DESTINY-Breast03 Presidential Symposia presentation. I'll talk about that quite a bit today, but it's important to not forget that ENHERTU was not the only story for Daiichi Sankyo at this meeting. We had 4 late-breaking presentations including ENHERTU DESTINY-Breast03 at the Presidential Symposia. We shared important data from 3 of our 6 DXd ADCs in clinical development. Beyond DESTINY-Breast03, findings from ENHERTU's DESTINY-Lung01 HER2 mutant cohort was also presented. ENHERTU demonstrated an overall response rate of 55% and durable responses in this trial. This was simultaneously published in the New England Journal of Medicine. These efficacy results compared favorably to existing therapies in this difficult-to-treat population, and we will work closely with health authorities with the goal of bringing ENHERTU to patients with this specific form of lung cancer. Dato-DXd, Daiichi Sankyo's second ADC, demonstrated a highly encouraging tumor response in patients with advanced non-small cell lung cancer patients with actionable genomic alterations. As you know, currently, there are no TROP2 directed therapies approved for the treatment of non-small cell lung cancer. We also presented proof-of-concept data from DS-7300, Daiichi Sankyo's fourth ADC. This is our B7-H3 directed ADC in patients with small cell lung cancer and metastatic castrate-resistant prostate cancer. As you can see from this slide, applying our proprietary DXd ADC technology to different targets is delivering new impressive data at an accelerating and consistent pace. And this is a testament to our research and development capabilities. Next slide, #18. Now I'm pleased to share with you the impact we see the DESTINY-Breast03 trial has had and will have across the oncology community. As you know, it was the first presentation in the ESMO Presidential Symposia. As Manabe-san mentioned, this trial demonstrated that ENHERTU provided a 72% reduction in the risk of disease progression or death compared to the standard of care T-DM1, which has been the standard of care across the globe for over a decade. The median progression-free survival for ENHERTU has not been reached compared to 6.8 months for T-DM1. The investigator-assessed progression-free survival is over 2 years at 25 months. The confirmed overall response rate was more than double. In the ENHERTU arm, it was 79.7% compared to 34.2% than in the T-DM1 arm. And 16.1% of patients had a complete response, which is actually higher than what is seen with the current first-line standard of care. And while overall survival is not yet mature, a 12-month landmark overall survival showed a strong trend towards improved survival with nearly all patients treated with ENHERTU were alive at 1 year, 94.1% in the ENHERTU arm compared to 85.9% in the T-DM1 arm. Now to understand the impact of this data, I think it's important I provide you with the right context. In the first line HER2-positive metastatic breast cancer setting, the standard of care today is a triplet combination of Perjeta, Herceptin and taxane. This is based on the CLEOPATRA study, which is shown on the top left of this slide. Perjeta added to Herceptin and taxane demonstrated and added an additional progression-free survival benefit of 6 months. Overall, progression-free survival was 18 months in the Perjeta, Herceptin, taxane compared to 12 months in the control arm. These data are considered groundbreaking even today. And today, it remains the first line standard of care. T-DM1 as demonstrated in the second line EMILIA study, which is shown on the bottom left, provided an additional 3 months progression-free survival as compared to lapatinib and capecitabine. Overall, 9.6 months progression-free survival with T-DM1 compared to 6.4 months, and T-DM1 has been the standard of care for over a decade. The ENHERTU as demonstrated in the DESTINY-Breast03 trial provides an additional progression-free survival advantage of approximately 18 months compared to the standard of care of T-DM1. Overall, ENHERTU's progression-free survival has not been reached in the investigator assessment, it is over 2 years, and the overall response rate of 80% is twofold higher than in T-DM1. The oncology community's response to this data has been overwhelmingly enthusiastic. Oncologists have told us to see in the second-line setting, progression-free survival and an overall response rate that is better than what has been reported in the first-line setting is unheard of and to see a hazard ratio of 0.28 is almost unimaginable. It's never been seen before in the treatment of metastatic breast cancer. Next slide, #19. To fully understand how impressive these DESTINY-Breast03 data is, we put it in context with not just other HER2-targeted drugs but all meaningful drugs in the treatment of metastatic breast cancer over the last 20 years. No cherry picking. We map these drugs along 2 axes: the added progression-free survival benefit over the standard of care control arm and the hazard ratio in that drug's pivotal trial. On this list and shown on this slide is all the HER2 drugs, Herceptin, Perjeta, tucatinib, neratinib, the CDK4/6 inhibitors like Ibrance and Kisqali, the PARP inhibitors. All of these drugs have made a difference in the treatment of metastatic breast cancer. They have been celebrated by the oncology community, and they represent the current standard of care. And as you can see, in HER2, DESTINY-Breast03 results is the outstanding outlier. The magnitude of progression-free survival benefit and the hazard ratio is greater than any drug in the history of treating metastatic breast cancer, and it's not close. Next slide, #20. The news coverage we have received has been satisfying and consistently positive. I'll read just 2 quotes that capture the overall tone. On the top left is a quote from Fierce Pharma. The showing is so impressive that the study authors concluded that the study, dubbed DESTINY-Breast03, will lead to a paradigm shift in the treatment of HER2-positive breast cancer. Bottom middle is a quote from Biotech Strategy Blog by Sally Church, "The last time I saw similar shock and awe or such fevered excitement in breast cancer was a decade ago. So it has been a long time coming for a new standard of care to be seen in this disease. This is what we live for in oncology, records and standards are meant to be broken." Next slide, Slide #21. I can also share with you that the response from the oncology community has been equally impressive. Here are a few of the many quotes from KEE opinion leaders across the globe. Now my favorite one is on the top right. The world is brighter for women with HER2 overexpressing breast cancers. The takeaway is ENHERTU is positioned to quickly become the new HER2-positive metastatic breast cancer second line standard of care, and the enthusiasm among investigators and KEE opinion leaders for ENHERTU in earlier lines of treatment is higher than ever before. We now expect all treatment guidelines will soon be updated to reflect this change in the standard of care. And in fact, the first major guideline change occurred last week. Next slide, Slide #22. These are the ESMO guidelines, the Annals of Oncology published on October '19, an update to the ESMO clinical practice guidelines for the treatment of patients with metastatic breast cancer. We've highlighted on this slide the key language in the updated guidelines, I quote, "Based on the strength of these efficacy and safety data, it is reasonable to consider trastuzumab deruxtecan ENHERTU the new standard second-line therapy in regions where this drug is available, moving T-DM1 to a later-line setting." They also included ENHERTU as a preferred option in patients with brain mets. Next slide, Slide #23. Based on these data, we believe once approved ENHERTU will become the new standard of care in the second-line setting. This slide illustrates how HER2-positive metastatic breast cancer patients are treated today. And this is a view of the United States landscape. It is similar across the globe. There are a few points to highlight. First, T-DM1 is the standard of care in the second-line setting across the globe. And you'll notice that the number of patients treated is reduced as patients progress. The drop-off from first line to second line and second line to third line is significant and real. We see this in the DESTINY-Breast03 trial, where 15% of patients treated with T-DM1, unfortunately died at 12 months. So as ENHERTU moves up in lines of treatment, so does the number of patients it can potentially benefit. Next slide. Slide #24. The next big catalyst for ENHERTU after the second line approval is the HER2 low space. While there are many drugs approved to treat HER2-positive breast cancer, there are no drugs approved to treat HER2 low-expressing breast cancer. As illustrated on this slide, breast cancer expresses the HER2 protein at varied levels. Only breast cancer patients with HER2 immunohistochemistry of 3 plus or 2 plus with FISH amplification have benefited from anti-HER2 agents. Today, breast cancer with low HER2 levels are considered HER2 negative. ENHERTU's DESTINY-04 trial is a Phase III trial in HER2 low metastatic breast cancer patients who have received previous chemotherapy. This result will be available in Q4 of fiscal year 2021. There is a second trial, DESTINY-Breast06 in HER2 low patients previously treated with hormonal therapies. This trial is aimed to displace chemotherapy. These 2 trials are based on very promising data shown at the San Antonio Breast Cancer Meeting in 2018 where ENHERTU demonstrated an overall response rate of 37% and a duration of response of over 10 months. What is very important to note is that HER2 low patients can be identified with the current IHC standard of care assays. So oncologists do not need a new diagnostic to identify these patients. Next slide, Slide #25. This HER2 low market is potentially big. After hormonal therapy and CDK4/6 inhibitors fail, current treatment is chemotherapy, which is woefully inadequate. While approximately 20% of patients are considered HER2 positive today and are candidates for HER2 therapy, approximately 55% of breast cancer patients may be characterized as HER2 low, 55%. This large patient segment has been recognized in the past for trastuzumab and T-DM1 failed to improve outcomes and the concept of anti-HER2 agents in this setting was put on hold or to rest. ENHERTU is rechallenging this paradigm. The DESTINY-Breast04 trial results will be available in Q4 of this fiscal year. Next slide, Slide #26. This slide illustrates ENHERTU's breast cancer program on 1 page. With our partner, AstraZeneca, we are investing in trials that address the remaining unmet needs aimed to advance ENHERTU from its first approvals in the third line setting to second-line setting as demonstrated in the DESTINY-Breast03 to the first-line metastatic breast cancer setting to then transform the treatment of HER2 low, previously HER2-negative patient segment, and to seek more cures in earlier disease with the DESTINY-Breast05 neoadjuvant study as well as multiple promising combination studies like the ongoing BEGONIA study. This robust life cycle program will provide new growth catalysts for the next decade. Next slide, Slide #27. I want to just quickly touch on Dato-DXd, it's our TROP2 directed ADC. It has demonstrated highly encouraging tumor response in patients with advanced non-small cell lung cancer. At ESMO, in a late-breaking mini oral presentation, we reported an overall response rate of 35%, with a medium duration response of 10 months. This was in non-small cell lung cancer patients with actionable genomic alterations who have received multiple previous lines of therapy. We are also conducting a global Phase III trial called TROPION-Lung01 in metastatic non-small cell lung cancer patients post IO therapy without actionable genomic alterations. And as I mentioned earlier, we recently announced that we will conduct another global Phase III trial called TROPION-Lung08 that will evaluate Dato-DXd in combination with KEYTRUDA compared to KEYTRUDA alone in treatment-naive patients with PD-L1 high advanced or metastatic non-small cell lung cancer without actionable genomic alterations. We also have a number of additional trials that have been initiated in non-small cell lung cancer and in breast cancer to evaluate Dato-DXd in either mono or in combination therapy. Next slide, Slide #28. Our HER3 ADC has demonstrated the potential to address the broad range of resistant mechanisms and EGFR-mutated non-small cell lung cancer following failure on TKI therapy. Now results from the Phase I trial published at ASCO earlier this year, demonstrated a very impressive 39% overall response rate and 8 months progression-free survival in this population. For context, salvage chemotherapy is the standard of care here, and it provides very limited efficacy. Progression-free survival is between 2 and 3 months after the failure of a TKI. So based on this, we have started the pivotal HERTHENA-Lung01 which is ongoing, and we have other studies in earlier lines of EGFR-mutated lung cancer in combination with osimertinib. Next slide, Slide #29. With Dato-DXd, HER3-DXd and ENHERTU, a mutated HER2-positive non-small cell lung cancer, Daiichi-Sankyo has an emerging lung cancer franchise to go along with our breast cancer programs. These programs have the potential to address unmet needs across the lung cancer continuum. And it also creates opportunities for commercial synergies and to further build our organizational capabilities to maximize all of these different opportunities. Next slide, Slide 30. So in conclusion, we've made substantial progress in a short amount of time. The Oncology business unit is launched. We have an outstanding, talented and diverse leadership team. ENHERTU is now approved in 37 countries, which provides a solid foundation. ENHERTU is well positioned to become the market leader in the second-line HER2-positive metastatic breast cancer space. We have another major growth catalyst right behind that with our HER2 low program, and we have multiple drugs in breast cancer and lung cancer right behind ENHERTU. Thank you very much for your time. And I'll turn it back over to Manabe-san.

Would you like to start the Q&A session from now on.

[Operator Instructions] The first question is from Hidemaru Yamaguchi at Citigroup. Please start your question.

This is Yamaguchi from Citigroup. I have several questions regarding the growth strategy on ENHERTU. And the first question is that you gave us -- you gave us the number of patients now on ENHERTU, which is around 8,000 globally at this moment. But given the -- looking about the potential third line patients, which used to be around 8,000 patients. So it sounds like the penetration ratio, which based on the survey a few years ago, were already met as far as the 8,000 patients is concerned. So my question is that this 8,000 patients currently, how much do you see the penetration of this patient compared to the potential sideline patient? It doesn't mean the market sounds like a bigger on the third line compared which you have been seeing a few years back as far as the marketing research is concerned? That's the first question.

Ken, would you please respond?

Yes, so when we look at the third line space, in the United States, we estimate that our market share is approximately around 40%, so it's about 40%. When we received the approval for second line, the number of patients in second line is actually larger, right, because there's no drop off. So does that answer your question?

Yes, so the second -- so you're talking about 40% share, but is it the same as the penetration ratio, which the potential sideline patients in a sense that you can go for 2.5x compared to your current patients in the near future, on the third line only?

If I understand your question, so all third-line patients, most third-line patients who can receive treatment, they do receive treatment today. As we -- so -- and we have 40% of that marketplace. What we see happening is, as we get approval in the second line space, the number of patients there are bigger. We believe that based on the DESTINY-Breast03 data that ENHERTU will become the market leader in the second line space rather quickly, and if we receive the -- if we are the market leader in second line, the third line market share would go down.

That's right. So the second question regarding on that one, sorry for that, how much do you see the number of the patients on treatment bigger compared to second line versus third line?

Yes, it's significantly bigger. I don't have those numbers on my fingers right now. But when we look at -- the way we look at it is if you look at the DESTINY-Breast03 data, at the end of 12 months, patients who receive the current standard of care, T-DM1, 15% of those patients have died. And there's probably more patients that are so sick. They're not -- they haven't died yet, but they're so sick. So the numbers are significantly bigger second line than third line, but I don't have the exact number to provide you with.

Okay, the last question is that you don't give me a straight answer, but what is a real world duration of the patients on the third line at this moment? Because from the clinical trial itself, it's more than 1 year, it could be 2 years as far as duration response is concerned. But given the number of the patients on treatment and given the U.S. sales currently, it sounds like duration of the treatment, it sounds like a 6 months or something like that by just the ballpark figure calculation. Is it the right number you are using? Or is it more longer or shorter?

Yes, so 6 months would be not accurate. So the number of -- the length of therapy in third line longer than that. As we mentioned back in July, our estimates were -- the real-world duration of therapy was a little bit shorter than our estimate at the beginning. And I mentioned that back in July. As we move into second line, patients are less sick and I fully expect that patients will stay on the drug longer than they are today in third line.

Right, right. Should be more than 1 year, is it the right way to say?

I think that's fair, yes.

The next question is from Naomi Kumagai, Mitsubishi UFJ Morgan Stanley Securities.

Can you hear me okay?

Yes.

Can you give us an example how do your new units actually accelerate the development process or interaction with business partner go down with the security agencies?

So if I understood the question, how does the oncology business unit work with, for example, the research and development unit within Daiichi Sankyo. Did I understand the question correctly? The way we work right now is Ken Takeshita is our Head of Research and Development. Ken's team and the OBU, we work hand-in-hand really from Phase I all the way to Phase IV programs. We have a group within our organization that works really to ensure that all of the inputs and the feedback that we get from our customers and regulators is filtered into our research and development program, and we ensure that we're doing clinical trials that are designed to change the standard of care and provide us with a competitive advantage. I hope that answers your question.

Kumagai-san?

Yes, second part of my question is also related to Oncology business unit. How does the oncology business in the rest of the world, especially in China was initiated by this new team.

So today, the oncology business unit solid line is the U.S. and Europe. Today, China and Japan operate separately. However, all 4 regions work very, very closely on all of the strategy decisions that we make. So when we develop our clinical trial program, we're doing it with input from our Japan colleagues and our China colleagues to ensure that our development programs meet the needs for those regions as well. So tactically, execution, Japan, and China are outside of the OBU. But in terms of strategy discussions, we all work very, very closely together.

The next question is from Shinichiro Muraoka at Morgan Stanley.

So I have a question about the pricing within the U.S. for ENHERTU. As far as I understand, the marketing cost of ENHERTU is only 5% or 10% higher than other side, maybe it's basically correct. And based on the [ D-B03 ] result, I think you can raise the price, right? For example, [ 30% ]. And so my question is, do you have any plan of raising the price in the U.S. for ENHERTU? And if you raise. So for example, a huge percent like 30%, in that case, will patients or will physicians don't appreciate to use ENHERTU work even though it has a huge price hike, the patients or physicians appreciate to use ENHERTU. Could you let me know your view please?

Yes, so thank you for that question. We don't make comments about what we'll do with price in the future. I do appreciate your question. And I think that given these remarkable results, the value of ENHERTU is going to be highly recognized in the United States. But in terms of price in the future, respectfully, we don't usually provide that. So if it's okay, I'll leave it at that.

Okay. And my next question is the HER2 -- sorry, CDK -- use of CDK4/6, so you are first targeting HER2-low maybe according to Slide 26 for CDK4/6 patient. And -- do you -- I think CDK4/6 is quite good. Could you let me know what's the ratio of CDK4/6 failure is? Is it 30% or 40% or much lower than that?

Yes. So when we look at the HER2-low marketplace, today, the standard of care is endocrine therapy plus CDK4/6 inhibitors. You are correct, CDK4/6 inhibitors have made a big impact in the treatment of metastatic breast cancer. Unfortunately, for patients, many, many patients ultimately progress. In fact, the majority of patients ultimately progressed on endocrine in CDK4/6 inhibitor therapy. All of those patients who progress today, they, for the most part, receive chemotherapy. Chemotherapy provides very modest benefits. So our first indication, which will be the DESTINY-Breast04 data, that is actually post chemotherapy. The next HER2 low data, which reads out is the 06 trial, and that is to displace chemotherapy. Our hope is that the benefits of these trials are so clear that most all patients would receive ENHERTU rather than chemotherapy because chemotherapy is simply not very effective.

So what's the ratio of -- so post CDK4/6 patients?

I don't have an exact number of what we expect our ratio to be. What I will share with you is the market is 2.5x bigger than the HER2 positive market. And if our data is really outstanding, we would hope that the majority of those patients would receive our drug.

Okay, final question is the D-B03 brain metastases data. So at ESMO, you showed some information of the brain metastases data, and it was quite positive. And so what's the current feedback from the physicians in terms of this brain metastases patient. So actually, so does the physician choose after ESMO ENHERTU or -- prioritize ENHERTU to [indiscernible] regimen. So I'd like to know the physicians -- current physician...

Thank you for that question. So certainly, the data that we shared at ESMO is providing physicians with more confidence about using ENHERTU in patients with brain mets. As you're aware, tucatinib in their clinical trial, they included patients with active brain mets. We have not included patients with active brain mets. So today, physicians are looking at patients in 2 different segments. A patient who has stable brain mets and is responding to treatment with, let's say, radiation therapy, for stable brain mets in HER2 is very competitive. And I'd say doctors are getting more and more confident there. In patients with active brain mets since ENHERTU does not have data in that population today, doctors are more reserved in choosing ENHERTU. And as you know, breast cancer patients as they go into third line and fourth-line therapy, as they continue to advance, the percent of patients that develop brain mets increases. But the reverse is true, too. As you go from third line to second line patients, which is where we'll go with our DESTINY 03 data, the percent of patients that actually develop brain mets there gets lower and lower. And so I hope that answers your question.

Next question is from Fumiyoshi Sakai, Credit Suisse Securities Japan.

The first question is the overall status of the U.S. The cancer patient treatment under COVID-19 in Japan, some of the patients avoided regular checkup, especially for breast cancer, the patient females, obviously. Now the [ loss ] commented at the [indiscernible] conference, they see 90% of the daily regular treatment is now getting back to normal. What about your status in the U.S? You -- obviously, you have just around the ENHERTU. You may not have deeper patient population at Roche that, but I think you have kind of say, the feeling how patients are now responding to the rate -- the situation of COVID-19. We are seeing the number of the patients is coming down in the U.S. but not as drastic as some other countries clinically. So what to your -- what is the up to latest situation there?

Yes, thank you for that question. We have seen in the United States that the screening for cancer, so screening of colorectal cancer for example, that screening number has gone down, but it is recovering. It is recovering. And I would say it's very close to where it was pre-COVID. So that would be true for screening things like colorectal cancer or breast cancer mammographies. When we look at the care of treatment itself, today, the oncology community has recovered. I don't know if it's 100%, but it's recovered close to what it was pre-COVID. What we're seeing in the United States is, for the most part, oncology care and the whole COVID situation has improved quite a bit. I will also add that for the patients that ENHERTU is helping today, so the third line patients and in the near future, the second line patients, remember, those patients are already under the care of oncologists. And so I would see very little impact from COVID for that type of a patient.

Okay, that's helpful, the second question is related to the D-B03 data. Actually, Manabe-san mentioned that with this data ENHERTU and Daiichi Sankyo with AstraZeneca picking up more interest among the physicians' community. I think that really is a good news. What about the patients in the U.S.? Do patients respond to this kind of news? So you clearly mentioned that the patient in [indiscernible] treatment has already being treated for some time duration. So with that kind of news, are you going to see more, let's say, interest coming from the second-line patient already? And after you filed, obviously, second-line treatment, do you expect the quicker or faster or bigger take-up to begin with?

Yes, so I'll answer that question, the 2 parts. So the breast cancer community in the United States is a very well needed community, meaning women who develop metastatic breast cancer, especially many, many of those women, I would say the majority are active in the local breast cancer community, whether it be local communities or the Internet community, and they become very, very knowledgeable about their disease. We have heard -- now these are antidotal stories, but we have heard many, many stories of women advocating for ENHERTU who have been on treatment for many, many years. The second part I'll answer, which is, today but in the future, we will do it more and more. We do actively educate the breast cancer consumer themselves. For example, in the United States, we actually have a team of oncology nurses that a major part of their job is to educate the offices about ENHERTU and how to manage ENHERTU. But they also, all of these nurses work with a local breast cancer community to educate the breast cancer community about ENHERTU, and that will only increase as we move into second line and in the future earlier lines of therapy.

Yes, that is a good thing. The last question, AstraZeneca as a partner, I mean this may not be a fair question, but it seems AstraZeneca is -- well obviously, they pay such good credit or highly evaluated [indiscernible] but that means it seems like they're taking control over ENHERTU in the U.S. marketing part or in the even European marketing part. How do you respond to this kind of, yes, comment, please?

Manabe-san, is it okay if I answer that?

Okay, already AstraZeneca and Daiichi Sankyo established very good relationship. We value each other. So far, we approved JEC, Joined Executive Committee. We, Daiichi Sankyo sent 2 members [indiscernible] are sent to the JEC. Also to maybe from AstraZeneca. Through the JEC, we are very fair decision -- we are making fair decision. This is my understanding. Keller-san, would you please, would you comment on?

Yes, yes, the only thing I'll add is it's actually a very, very excellent partnership. And when we look at decision-making in U.S. and Europe and also the execution, it really is a 50/50 partnership. And so -- so I don't feel at all that AstraZeneca is kind of doing more or leading more than Daiichi Sankyo. That's actually not true. It's really a 50/50 partnership, both on the strategic and the executional level. I think in the United States, AstraZeneca is a bigger name. So I think that kind of creates a different impression. But in reality, it really is a very, very good partnership.

The next question is from Seiji Wakao at JPMorgan.

So my question is about penetration speed with second line. This will be over up [indiscernible] question, but please let me know. Today you show there are key doctors, high evaluation of the DESTINY-Breast03 data. I believe that if ENHERTU is approved for second-line settings, in-house sales could increase rapidly in the short term under kind to your company's estimation sales trend, which you showed at Slide 5. I'd like to know your thought on the penetration speed on the second line setting is approved. How sales performance might change. This is my first question.

Ken-san, please.

Yes. So -- So I agree with your assessment. I -- what we see happening is ENHERTU quickly becoming the second line standard of care, this will be obviously post approval, but the magnitude of benefit is so extraordinary, the reflection that we will -- that we've seen in the ESMO guidelines, which clearly state that ENHERTU is now the new standard of care in the second line. I expect the NCCN guidelines in the U.S. to be updated very shortly. And given that most physicians today now have some experience with ENHERTU in their own hands, I think all of those factors lead to a very successful and rapid launch in the second-line setting.

So next question about the visibility of HER2-low Adjuvant [indiscernible] line, so especially about Adjuvant. So I'd like to know your thoughts on the possibility of Adjuvant in HER2-low settings. So far Daiichi Sankyo has not mentioned the possibility of Adjuvant for HER2-low. Depending on further data, is there a possibility of challenges here? For example if DESTINY-Breast04 is successful, will you be targeting all patient populations as well as HER2-positive setting -- or do you have different strategies for HER2-low and HER2-positive because their competitive landscape is different. This is the last question.

Ken-san?

So right now, our earlier disease program is the DESTINY-09 study, which is -- I'm sorry, that's the incorrect one. I believe it's the DESTINY-05 study, which is actually looking at ENHERTU versus T-DM1 in the HER2-positive neoadjuvant setting. So that's the 1 earlier major program that we have today. But that doesn't answer your question. The question is, are we looking at earlier disease settings in the HER2 low segment. We're actually evaluating this right now. What I can tell you is the enthusiasm from the oncology community after DESTINY-Breast03 is very, very high. And so we are working with AstraZeneca to look at these earlier programs in the HER2-low setting, and we will update you on where we are sometime in the future.

The next question is from Yo Mizuno at Tokio Marine Asset Management.

So regarding on HER2 breast cancer, you replace and displace chemo strategy moving forward to earlier lines. So in this setting, there are many drugs especially a partner AstraZeneca has a wide range of molecules, on PARP inhibitors and potentially [indiscernible]. And what would be a trigger for you to begin a combo treatment in development not just replacing chemo, but possibly moving forward with novel combinations.

Ken-san, could you respond?

Yes, so today, one of the nice advantages of working with AstraZeneca is, as you mentioned, they've got a broad portfolio of oncology drugs, especially in the lung cancer setting. Currently, we are running a number of studies, for example, the BEGONIA study combining our drugs with -- combining ENHERTU, for example, and Dato-DXd with AstraZeneca's drugs. So today, we're doing proof-of-concept studies based on what we see in terms of activity. We will then take that into the next advancement. So we're doing that today. And our hope is that some of these combinations show really exciting results.

Okay, and then AstraZeneca doesn't have a CDK4/6 inhibitor, but is it possible that some time in the future, you'll be and trying ENHERTU plus CDK4/6 or possibly even Dato-DXd plus CDK4/6 in readily near future?

Yes, I think you're thinking about it correctly. I mean, wherever chemotherapy has shown some modest benefits, that is an area that potentially our ADCs could provide more benefit. Today, the combination of CDKs and chemotherapy is not standard of care. But with the activity of our program, there are many, many different combinations that people are interested in. So I don't have any comment in terms of solid plans on that, but the philosophy that undermines that statement, we completely agree with.

My final question is with ENHERTU. You're doing several tumor studies. And then we are already seeing several [indiscernible] in minor cancers. Do you see sometime in future that ENHERTU could then possibly get tumor-agnostic indication.

So today, we're doing a number of studies as you mentioned, in HER2 positive lung cancer and HER2 mutated lung cancer, which I mentioned earlier, in colorectal cancer, in gastric cancer. And so those are the 4 major places that we're in right now. But there are many other studies in different areas. That pain tumor question in terms of clinical trials, we're addressing all of them. But to get an agnostic label is a more sophisticated regulatory question, which I would have to get back to you on the possibility of doing that.

There are no more questions. We will close the Q&A session.

Okay, then we would like to close today's conference call. Ladies and gentlemen, thank you again for your interest and participation. Goodbye.

This is the end of the call. Thank you for your participation.