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

Thank you very much for waiting. Now I'd like to start Daiichi Sankyo's R&D Day. I'm Asakura from Corporate Communications Department and I will serve as MC today. First, let me explain the language for this meeting. We are going to use Japanese and English in this meeting. Simultaneous interpretation is available. Please click interpretation icon at the bottom of the Zoom screen and select the language of your preference Japanese, English or off. If you select off, you will hear the original sound. On the Zoom screen, English presentation materials will be displayed. While in the live streaming, presentation materials in Japanese will be shown. Presentation materials in Japanese and English are posted on our corporate website under the IR Presentation Materials section in the IR library. You can download the files if necessary. Today, 4 members are participating as is shown on Page 3. President and CEO Sunao Manabe; Head of Global R&D Ken Takeshita; Head of Japan R&D Wataru Takasaki and Mark Rutstein, who assume the post of the Head of Global Oncology Development in October this year.

Hello. My name is Mark Rutstein. It's very nice to meet everybody. I've been at Daiichi Sankyo for less than 2 months. And I have come from Bristol Myers Squibb, where I was leading the late-stage immuno-oncology program. I have nearly 20 years of oncology clinical development experience across the Amgen and Eli Lilly and Bayer and Bristol-Myers. It is my true pleasure to be here and I look forward to working with many of you going forward. Thank you.

Thank you, Mark. You can find today's agenda on Page 4. First, Manabe will give you opening remarks. Then Ken Takeshita will explain the clinical progress and R&D strategy. We will take your questions at the end. Please note that we are recording this meeting. Thank you for your understanding. Now we'd like to begin. Manabe Sunao, please.

Manabe speaking. Thank you for joining Daiichi Sankyo's R&D Day today. I will talk about the progress of the 5-year business plan where we are now in its second year. Please turn to Page 5. This page shows the positioning of the group's 5-year business plan for sustainable growth. During the course of this 5-year business plan from FY 2021 through FY 2025, we will achieve our 2025 Goal, Global Pharma Innovator with Competitive Advantage in Oncology, and will shift to further growth towards our 2030 Vision. Page 6 shows our strategic pillars for our 5-year business plan. Our R&D capabilities are important in the first and the third strategic pillars. Firstly, to maximize 3 ADCs. We have been maximizing ENHERTU and Dato-DXd through a strategic alliance with AstraZeneca and maximizing HER3-DXd without a partner. We will continue to expand workforce and supply capacity flexibly, depending on changes around product potential. Secondly, to identify and build pillars for further growth. To promote sustainable growth during the course of the 5-year business plan, we will identify new growth drivers following 3 ADCs and select an advanced promising post-DXd ADC modalities. Our initiatives planned for each strategy are making steady progress and we are very satisfied with the achievement so far. From Page 7 and onwards, you can find the major progress since R&D Day 2021. First, about ENHERTU. We have been making steady progress in maximizing product value of ENHERTU based on the approval of new indications and strong market penetration. I'd like to mention 3 major achievements we have made since the R&D Day last year. The first one is the approval for HER2-positive breast cancer second line. Based on DESTINY-Breast03 study which showed unparalleled improvement in PFS compared to standard of care KADCYLA T-DM1. HER2-positive breast cancer second line was approved in May this year in the United States. We started promotion accordingly. ENHERTU has already established leadership in HER2-positive breast cancer in the second-line settings and beyond in the United States and expanding market to other countries and regions. Secondly, ENHERTU has pioneered HER2 low breast cancer as a new clinically meaningful patient segment. Based on DESTINY-Breast04 study, which showed potential to transform treatment for HER2 low breast cancer patients, we obtained the approval for HER2 low breast cancer previously treated with chemotherapy in the United States and we started promotion in August 2022. Also in November, DESTINY-Breast04 study was selected as the clinical advance of the year, a script award given to a clinical study, which made the greatest contribution to the advance of health care. Previously untargetable HER2 low breast cancer patients are known to account for approximately half of all breast cancer patients. In other words, the number is twice as much compared to that of HER2-positive breast cancer patients. We have been able to provide a new treatment option to more breast cancer patients, which is one of the major achievements in the current fiscal year. Right now in the United States, there has been a rapid uptake for HER2 low breast cancer in the United States. We are aiming to accelerate market expansion to other countries and regions as well. Thirdly, our initiatives to expand leadership across other HER2 targetable tumors are also making steady progress. In August ENHERTU was approved for HER2 mutant NSCLC second line and beyond based on DESTINY-Lung01 and 02 studies, we started promotion in August. ENHERTU was approved for the third cancer type, following breast cancer and gastric cancer. We will continue to aim for getting approval for earlier lines of therapy in these 3 tumor types. At the same time, we will aim to expand the indications other than those 3, so that we can maximize the product value of ENHERTU. Page 8 shows the progress of Dato-DXd, HER3-DXd and Alpha. We are making steady progress in the development of growth drivers after ENHERTU. Regarding Dato-DXd and HER3-DXd, pivotal studies are on track, respectively. To further enhance product value, we also started 3 new Phase3 studies in the patient populations where we obtained promising data in Phase1. We positioned 2 DXd-ADCs, DS-7300 and DS-6000, as rising stars as growth drivers following 3 ADCs. Development here is also making steady progress. We obtained data, which showed early efficacy signals in multiple cancer types such as small cell lung cancer and ovarian cancer. For DS-7300, we started Phase2 study in extensive stage small cell lung cancer. Post DXd-ADC modalities are also making steady progress. As for DS-5670, COVID-19 messenger RNA vaccine, primary endpoint was achieved in Phase1/2/3 study to evaluate the efficacy and safety of the booster vaccination in November. We are now preparing to file our submission. Development of other new modality is also making progress. Due to strategic reasons, we cannot disclose the details right now. But we started Phase1 clinical study for the next-generation ADC DS-9606. Please turn to Page 9. The value of 3 ADCs, including ENHERTU and the growth drivers following them has been greatly enhanced over the past year. So we are becoming more confident that we can achieve FY 2025 goal in the 5-year business plan. We will continue to take challenges so that we can provide our products to patients who need new treatment options earlier. That's all from me. I'm handing over to Takeshita.

Manabe, thank you very much. And let's go to the next slide here. We're going to go through the progress that we have made in various cancers, so I'll first with breast cancer progress. Next slide, please. Probably one of the most important accomplishments from the 2022 is shown on this slide. This photograph that you see on the upper right is the moment when the DESTINY-Breast04 data was presented at the ASCO 2022 Plenary Session. We received a standing ovation for our trial data because -- and receiving a standing ovation is rather unusual, even at ASCO where many breakthroughs are being presented. I think personally, I have seen many -- one of those outstanding ovations, once or twice in my career. And the reasons are; why was this so monumental accomplishment? And it's because we created with this clinical trial, a new patient segment, which we call HER2 low. So in these patients who are neither HER2 completely negative and neither also HER2-positive, we studied in HER2 in these patients with a low level expression of HER2 regardless of their hormone receptor status. You can see here that both progression-free survival and overall survival are quite positive in terms of hazard ratio and the statistical significance. And this was really probably for us our #1 accomplishment for 2022. And the next slide shows you how this fits into the treatment paradigm. So you'll see here that on the left-hand side, the old treatment thinking, in which the breast cancer patients were divided into HER2-positive, hormone receptor positive, but HER2 negative and both hormone receptor negative and HER2 negative, namely the triple-negative breast cancer. What we have done here is that among the patients who are hormone receptor positive and HER2 negative, this gray box, we have taken about 50% of the patients in that category and created a new category. Those patients are eligible now to receive ENHERTU because of the DESTINY-Breast04 data that we just talked about. So this is first ever approval for HER2 low patient population. And remarkably we received approval within 11 days of filing acceptance under the FDA RTOR program. And to give you an update on the regulatory submission status, we have filed in both Japan and Europe and in China. And we are waiting regulatory actions in those countries. Next slide. More recently, as recently as last week, we updated the data field at the San Antonio Breast Cancer Conference. We presented 30 abstracts, including 3 oral presentations. And here are some highlights of our presentations at the San Antonio Conference. We presented overall survival data in DESTINY-Breast03 study. You're familiar with this as one of our original DESTINY-Breast studies. And in new updated data, we show that the overall survival benefit is quite substantial and significant compared to control arm. And next, we show the brand-new data from a clinical trial called DESTINY-Breast02. This was a confirmatory study for our original registration trial, which was a single arm Phase2 trial called DESTINY-Breast01. We also reported Dato-DXd breast cancer data from the TROPION-PanTumor01's trial, in which, we reported the patients with hormone receptor positive HER2-negative metastatic breast cancer. And we also presented data on the durvalumab combination as part of the AstraZeneca sponsored the BEGONIA study. We'll get to these a little bit later and some of the details here. Next slide. First, I'd like to go over with you the data from the DESTINY-Breast03 clinical trial. You'll remember that this was a clinical trial comparing T-DXd and HER2 versus the old standard T-DM1. And in the updated -- so we updated the progression-free survival and overall survival. And these remained quite clinically meaningful, both progression-free survival and overall survival and statistically significant improvement in overall survival compared to T-DM1. Next slide. In terms of safety, the Median treatment duration was much longer in T-DXd arm compared to the T-DM1 arm. The rates of grade 3 TEAEs are similar between the 2 arms. And in terms of the most common drug-related TEAEs, in the T-DXd arm, it was pneumonitis and ILD. And in the T-DM1 arm, it was cytopenias and pneumonitis. Specifically, in terms of pneumonitis, we want to mention that the incidence of the pneumonitis and ILD were similar to other breast cancer trials with in HER2. And with longer treatment exposure and follow-up, the ILD and pneumonitis rate increased from 10.5% in the PFS interim analysis to 15.2%. The overall incidence of grade 3 events was 0.8%, which was the same as the initial PFS interim analysis. And we -- there were, no grade 3 -- grade 4 or grade 5 drug-related events as per the central blinded adjudication. So therefore, the updated results from DESTINY-Breast03 with a longer follow-up further support the use of ENHERTU as the preferred second-line standard of care in patients who have HER2 positive breast cancer. And finally, I want to mention that the results of this study -- this particular DB-03 study, was published on the same day as the San Antonio in a journal assay. Next. Next study is the DESTINY-Breast02 trial. So this -- as I mentioned earlier, this is the confirmatory study for our original DESTINY-Breast01 study, which was conducted in patients with relapsed metastatic HER2-positive breast cancer. Unlike the DESTINY-Breast01 study, which was the original registration study, this DESTINY-Breast02 study is a randomized study comparing ENHERTU versus the control arm, which was investigator's choice. And here, again, you'll see the substantial improvement and superiority of PFS and overall survival for the ENHERTU with a very good hazard ratio and the key value that are highly statistically significant. In terms of safety, there were no new safety signals. The safety was really consistent with what we already know about the safety of ENHERTU and the incidence of ILD in this study was 10.4% overall. And in terms of grade 5 ILD events, it was 0.5% compared to our original DESTINY-Breast01 of 2.7%. And we believe, of course, that this reduction in the incidence of grade 5 represents our improved understanding of how to detect ILD early and how to manage ILD early. So that these ILD events did not progress to grade 5, but they are caught early on, at earlier stage at grade 1 or grade 2. Next slide. So as a summary, in terms of breast cancer, we have a new standard of care in HER2-positive metastatic breast cancer with breast cancer DESTINY-03 study data and DESTINY-Breast02 data as well. And of course, at the San Antonio Conference, if you attended it, there was a lot of discussion about this new category of patients, HER2 low. And as I mentioned earlier, this HER2 low patient population was really truly pioneered by DESTINY-Breast04 study. And as of today, ENHERTU is the only drug that is indicated for this particular type of breast cancer, HER2 low metastatic breast cancer. Next slide. Okay. Now I'm going to switch over to our Dato program. Dato is the ADC that is targeting TROP2. And we reported at the San Antonio, some results from TROPION-PanTumor01. And this is a multi-cohort clinical trial. And in -- at the San Antonio Conference, we presented data on one cohort of patients who are hormone receptor positive and HER2 negative. And you see that based on this waterfall plot and the spider plots, and you see the very encouraging effort and the durable efficacy in patients with hormone receptor positive HER2 negative breast cancer patients. And these are patients who previously received a median of 5 lines, 5 lines of treatment for metastatic disease. So these are patients who are highly refractory to standard of care treatments. And so response rate of 27% here is quite good with a median progression for survival measured at 8.3 months. In terms of safety, in this 41 patient data set, grade 3 and worse -- adverse events were seen in 21% of the patients. Most common adverse events were stomatitis and nausea. And there were 2 patients who had pneumonitis grade 1 in 1 patient and grade 3 in 1 patient. And one patient was adjudicated as having grade 3 drug-related interstitial lung disease. So therefore, we concluded from these data that the Dato-DXd demonstrates encouraging efficacy and manageable safety profile to support its further development in breast cancer, including this clinical trial called TROPION-Breast01. This is a Phase3 randomized study being conducted in the second-line setting for hormone receptor positive HER2 negative breast cancer. Next slide. We previously reported on the Dato-DXd data in triple-negative breast cancer. And this data here that was presented at San Antonio represents an update on that dataset. And again, we can see continued efficacy of data in this patient population. These are patients who had 3 prior, alliance; for the treatment of their triple negative breast cancer, so therefore, highly refractory patient population. In this patient population, the overall response rate was 32% and the median progression-free survival, 4.4 months, overall survival 13.5 months. The safety was quite good, very similar pattern to the prior slide. The most common AEs being stomatitis, nausea vomiting. And at least in this patient cohort of 44 patients, there were no cases of ILD reported, so again, in triple-negative breast cancer. In this PanTumor TROPION study, Dato continues to show good efficacy and safety profile. And these data really support our ongoing Phase3 study of TROPION-Breast Cancer02 in the frontline setting for triple-negative breast cancer. Next slide. Okay. So this is the BEGONIA study. This is a clinical trial being conducted by AstraZeneca as a sponsor. And this is a very interesting trial. It's a multi-cohort trial in which various combinations of drugs are tested in triple-negative cancer, triple-negative breast cancer. These are previously untreated -- metastatic patients. And this is a very interesting cohort of patients who were treated with a combination of Dato-DXd and durvalumab. And there was a confirmed response rate of 73.6%, including 4 patients who achieved a complete response. And you'll see, based on the spider past here that responses appeared to be quite durable in this patient population being treated with Dato-DXd and durvalumab. The most common AEs were nausea, stomatitis and alopecia. There are patients who had the various grade 3 and worse treatment-related AEs, but including grade 1 adjudicated ILD/pneumonitis in 2 of these patients out of the total of 61 patients. So on these data, we concluded that this combination of Dato-DXd plus durvalumab shows a compelling high response rate and in a quite manageable safety profile in the frontline setting for TNBC. And that we are very interested in exploring this combination further in triple-negative breast cancer. Next slide. So what are we doing with this combination data, so the durvalumab plus Dato-DXd? So this is a new study that we're talking about here. And this study is called TROPION-Breast03 study. This is a study being sponsored by AstraZeneca. This is a study in which patients who have residual disease; after new adjuvant chemotherapy is enrolled. With a 3-arm study, sample size a little bit over 1,000 patients. And here are the 3 arms. The control arm is investigator's choice of therapy. The second arm is Dato-DXd single agent. And the third arm, of course, is, our, the most interesting experimental arm here, which is a Dato-DXd plus durvalumab. And you'll see the endpoints here, the primary endpoint being disease-free survival, secondary endpoint being disease-free survival, overall survival, et cetera, in the various comparisons of the 3 arms. And so this is -- this was just posted on clinicaltrial.gov about less than a few weeks ago. And we are very interested in seeing this study along and, of course, seeing the results from this study. Okay. Next slide. So just to summarize here, the -- in terms of the Dato-DXd breast cancer program. We've seen that this drug is active in hormone receptor positive HER2-negative metastatic breast cancer. And that really gives us more, further confidence in the currently ongoing TROPION-Breast01 clinical trial. We continue to see durable antitumor activity in patients with previously treated triple negative breast cancer. And as you know, we have already been clinical -- conducting a clinical trial, Phase3 trial of TROPION-Breast02 in triple-negative breast cancer. And finally, based on the BEGONIA data, this is a durvalumab plus the Dato-DXd combination for early triple-negative breast cancer. We have initiated a new trial, Phase3 trial called TROPION-Breast03. Next slide. Okay. So in the next several slides, I'm going to be reviewing with you our progress in lung cancer. Next. So first of all, I think you are aware already that in HER2 has activity in lung cancer, HER2-mutated non-small cell lung cancer. That has already been reported at ESMO and also in various journals. You see here the remarkable waterfall block here, showing a response rate that's quite remarkable, around 58%. And the duration, the response was 8.7 months. And the safety of this drug in lung cancer patients with this HER2-mutated non-small cell lung cancer, which is quite good and consistent with what we know about the safety profile of in HER2 in breast cancer patients in terms of just things like the incidence of ILD and other adverse events. Next slide. Okay. So in terms of what we have accomplished in terms of -- for the lung cancer program, many of you are aware that we received previously a breakthrough therapy designation from the FDA for ENHERTU in HER2 mutated non-small cell lung cancer. We've received already approval for ENHERTU at this dose that's mentioned here, 5.4 milligrams per kilogram dose. And at the same time, we also received FDA approval for new companion diagnostics, both tissue and liquid biopsy tests for HER2-mutated non-small cell lung cancer. We have also -- so this is our U.S. status. We have also submitted the same dataset to other agencies, notably in Japan and we also plan to do submission in Europe. In addition, I want to mention here that we have additional clinical trials going on DESTINY-Lung04 and 05 in HER2-mutated non-small cell lung cancer in the frontline setting for the 04 Study and second-line setting for the 05 study going on in China. So this is a very important study and a very important program for ENHERTU, particularly because it's a brand-new indication beyond the gastric cancer and breast cancer that we already have indications for. Okay, next slide. So now we're going to switch over to the Dato-DXd program in lung cancer. And so this we presented earlier this year at the World Lung Cancer Conference, the data from TROPION-Lung02 study. And in this interim analysis, you'll see a good activity of both the doublet and the triplet in these patients within the frontline setting. So by doublet here, we're talking about the data plus pembro combination, and triplet here refers to the data plus pembro, pembrolizumab plus platinum. Both seemed to be quite active. The response rate was 62% with the doublet and 50% with the triplet. These are, of course, the sample size is quite small. So the confidence in interval is quite large. But you'll see that probably perhaps approximately the doublet and triplet response rates are quite similar. In terms of treatment-related AEs, we saw Grade 3 and worse AEs in about 35% of the patients receiving the doublet and 54% of the patients received in the triple and of course, because, we do expect to see more adverse events in patients getting the triplet due to the addition of the platinum agent. Most frequent AEs were stomatitis and nausea. So this is very encouraging data for us, because it really tells us that this combination of Dato-DXd plus a checkpoint inhibitor, namely pembrolizumab, it is quite active and responses appeared to be quite durable. Next slide. So based on these data, we have initiated the 2 very important large clinical trials. These are both intended to be registration trials. The first one is the TROPION-Lung07 trial. This is a patient population who have non-small cell lung cancer whose PD-L1 status is less than 50% by staining. In those patients, as you are aware, the standard of care treatment currently is pembrolizumab plus multi-agent chemotherapy, typically pemetrexed and platinum. So that -- so in TROPION-Lung07, that is the control arm, arm C. There are 2 experimental arms, representing the 2 types of combinations that we studied earlier in the previous slide. Arm B is the doublet, and Arm A is the triplet. Arm B is the doublet of the Dato-DXd plus pembrolizumab and Arm A is a triplet that adds a platinum to the pembrolizumab Dato-DXd doublet. The second trial is the other half of the patient population not covered by the upper study, the Lung07 study. So in TROPION-Lung08, we are studying patients whose PD-L1 status is 50% or greater. In those patients currently, the standard of care is pembrolizumab monotherapy. And so in this study in TROPION-Lung08, the experimental arm is pembrolizumab plus Dato-DXd. So both of these studies are ongoing now and we are very excited about both of these studies and we anticipate seeing the data later in the near future. Next slide. So I just want to summarize here -- the status of our lung cancer program. We have approval for ENHERTU in the HER2-mutated non-small cell lung cancer in the second line and worse. And we have now initiated a randomized Phase3 study of DESTINY-Lung04, this is in HER2 program in the front-line setting in patients who have HER2 mutated non-small cell lung cancer. Our Dato program remains one of the most important clinical trial program for lung cancer. We have 2 important clinical trials, TROPION-Lung07 and 08. In addition, we are still continuing with the TROPION-Lung01 randomized Phase3 study. This is in the second and third-line setting, unlike the TROPION-Lung07 and 08, which are in the frontline setting. And finally, we did not give any recent data updates on our HER3 program. But we did initiate a new Phase3 trial of HER3-DXd, the Phase3 trial, HERTHENA-Lung02 in August of this year. These are for patients who have DGA for mutated non-small cell lung cancer. Next slide. Okay. Now in the next few slides, I'm going to go over with you some new ADCs that you may not have heard about. The rising stars, these represent the new DXd-ADCs. And we also have some hematology data to show you. Next slide. First one is DS-7300. The target here is an antigen called B7-H3. This is a rather ubiquitously expressed tumor antigen. And we initiated quite a -- some time ago, the Phase3, the Phase1 and 2 clinical trial DS-7300. And most recently, at ESMO, we reported on some data on small cell lung cancer, which I will go over with you a little bit later. On the right-hand side of the slide here, DS-6000, this is yet another DXd-ADC program. The target is CDH6, Cadherin 6. And unlike this B7-H3, which is, as I said, is widely expressed in many cancer types. Cadherin 6 is restricted mostly to ovarian cancer and renal cell cancer. So we are focusing our efforts initially on those cancers. So next slide, okay. So in terms of 7300, here's some data and across all different cancers that we study and at the various different doses that we study. And you'll see all kinds of study -- all kinds of indications or kind of patients were enrolled in the study. But at least looking at the waterfall plot, you can see that this drug is quite active in this patient population of various refractory cancers. Response rate was 28%. Most common AEs were cytopenias and some GI symptoms. There was some drug-related ILD and pneumonitis reported. Next slide. This slide shows a concept of the data in some interesting patient populations, indications. First is SCLC, small cell lung cancer. You'll see here that as of today, in this slide, the response rate here is 53% in this patient population with refractory small cell lung cancer. The duration of response is 5.5 months. So we think that this is a very good data so far. And we are pursuing further development of 7300 in small cell lung cancer. Next is metastatic castration-resistant prostate cancer. And here, you see a response rate of 28% and you'll see, in the earlier slide, sorry, that -- and in addition, although not shown in this slide, we are seeing additional activity of 7300 in esophageal squamous cell cancer as well as the squamous type non-small cell lung cancer. So these are very encouraging data for 7300 program. And we are accelerating our development of this drug in small cell lung cancer as well as other cancer types. Next slide. For the DS-6000 program, as I mentioned, we are focusing on ovarian cancer and renal cell carcinoma. And so far, we're still in the early stage of the Phase1 program. But we are starting to see already a definite signal in the ovarian cancer. Even if we take into account the lower doses, we can see that about 5 out of 15 patients with ovarian cancer showed a response. And so very encouraging, particularly at these higher doses, the response rate and also CA-125 reduction is quite high. And so we think that we can pursue ovarian cancer further in this program. And of course, we are still waiting to have enough renal cell carcinoma patients to make a decision there. So you can see that with these 2 new DXd-ADCs, there is quite promising clinical activity and we are pursuing a registration path for those 2 new DXd-ADCs. Next slide. We're going to now switch over to our hematologic malignancy program. The first one is Quizartinib and second one is EZH program. And this slide shows our Quizartinib program. We just -- this was -- this data was presented at the Presidential Symposium of the European Hematology Association. And you will see that in this clinical trial, a randomized study of chemotherapy, plus or minus Quizartinib. There's a clear difference in the overall survival curve with hazard ratio as shown there of 0.77 and the p value of 0.03. And we're very excited about this data. And the data of the overall survival improvement is clinically meaningful. So we have submitted an NDA based on this data to both, FDA, EMA and the Japan regulatory agencies. Next slide. This slide shows that we achieved our first approval for this drug called valemetostat, also known as EZHARMIA. This is the EZH1 and EZH2 dual inhibitor. And we received in Japan an approval for adult T-cell leukemia-lymphoma. There is remarkable activity here with a high response rate of 48%, including 20% response rate in this patient population, which is generally considered to be quite refractory. In addition to this ATLL program, we have ongoing clinical trials in other T-cell lymphomas and other B-cell lymphomas as well as in solid tumors. So we are very, very excited about this drug. This -- what's shown here is really represents only our very first step in what we hope will be many, many steps and many, many approvals and many different indications for this drug. Next Slide. So as a summary for these rising stars, the next-generation DXd-ADCs and our hematology program, we want to accelerate the development of 7300 and particularly with respect to small cell lung cancer. We're very interested in the 6000 program in ovarian cancer right now, especially. We are waiting for the regulatory approval of Quizartinib for the frontline setting for acute myeloid leukemia. And we hope to see that sometime in the first half of next year. And in terms of the valemetostat program, we received already one approval for a small indication in Japan. And we're continuing to deal with this further in other broader indications. Next slide, so, okay. Now in terms of the next few slides, I'm going to go over with you how we think about the remainder of the pipeline. Next slide. So currently, as you just heard, we have 5 DXd-ADCs that are very active in lung cancer, breast cancer and many other solid tumors. So what is our next -- what is our plan for the future for the next 5, 10-plus years? And that's what I'm going to go over with you in the next few slides. Basically here's what we want to do. So in addition to breast cancer and lung cancer, we want to study many other cancers with unmet medical needs, so really expansion of indications beyond lung and breast. Also in lung cancer and breast cancer, we want to expand our indications in those diseases into earlier lines of therapy. And in terms of extending the use of HER2 Dato and others, we have -- we'll see that as illustrated on this slide on the right-hand side, we have other ADCs coming later on, not just the 7300 and 6000, but DS-3939 and other next-generation ADCs. These will contribute to the extension of our DXd-ADC program for the next many, many years to come. We are also quite interested in having a good look at our existing research pipeline assets to see how we may combine them with existing DXd-ADCs, thereby, again, also giving us an opportunity to extend our presence in lung cancer, breast cancer and other solid tumors. Okay. Next slide. So in summary, here's our breast cancer strategy. We want to build on our leadership in breast cancer. You can see here now that ENHERTU is going to become a very important drug for many, many patients with breast cancer. And we see that as an opportunity to provide not just a foundational treatment, not only in the refractory setting, but in earlier lines of therapy. But also as the base to study combinations of ENHERTU with other compounds that we have in our pipeline. And because we have been conducting a lot of clinical trials, we are starting to really understand the biology of these HER2 low and HER2-negative breast cancers and how they respond to various DXd-ADCs we have. And we can start to understand how to rationally develop and design new drugs in patients who are no longer benefiting from DXd-ADCs. So next slide. Next slide is a summary of how we think about the entire picture of breast cancer. You'll see that currently, we have 2 major drugs EHHERTU and that's also illustrated here in orange color and also DXd-ADC that's illustrated in blue. So between the blue and orange colors, you can see that most patient populations in breast cancers are covered by the existing clinical trials and also some thinking about earlier stage clinical trials that are under discussion. And finally, I want to very much also mention here that to the far right here, where it says post and HER2 space. This is a very important strategic patient population, patients who are no longer benefiting from in HER2 or Dato, how can we help them? And as I mentioned to you, we have many next-generation ADCs and other assets that we can use to test whether or not they have activity in this post in HER2 patient population. Next slide. Here's a summary of our lung cancer strategy. So currently, we have already one approval for in HER2, in HER2-mutated patient population. We are working on the HER3 ADC by focusing on the EGFR mutated non-small cell lung cancer patient population. And then most importantly, the Dato-DXd program. This is our major program in lung cancer for both the PD-L1 positive and PD-L1 negative patient populations. So the TROPION-Lung07 and 08, these 2 studies cover the majority of patients with non-small cell lung cancer. And we're very excited about seeing the data on those 2 clinical trials in the near future. And finally, I want to remember to mention that we think we now have a drug that we can develop in small cell lung cancer, namely 7300. Next slide. So the next slide shows how we think about the entire world of lung cancer. So in terms of non-small cell lung cancer, those patients with actionable genomic mutations, if they have a HER2 mutation, then ENHERTU is going to be our drug to develop. If they have an EGFR mutation, then it's going to be HER3 DXd that we will further develop in these patients with EGFR mutated lung cancer. But for the non-actionable genomic mutation patients, Dato-DXd represents our thinking about how we can help these patients, TROPION-Lung07 and 08 or the 2 trials addressing this patient population. And as indicated here, we are, of course, thinking about earlier stage lung cancer stage 1 through 3 and how to position Dato and HER2 and HER3-DXd in these patient populations. And finally, I want to mention the 7300 program in small cell lung cancer. Next slide. Okay. So now I want to go over with you some of these combinations that I mentioned to you earlier. You already heard about from some checkpoint inhibitor combinations, which is starting to yield very interesting data. We have been ongoing clinical trials in targeted therapies that are listed there, such as tucatinib and osimertinib and other clinical trials. I also want to mention that it's very important from an internal research and development strategy to mention here that at the bottom, we have a number of internal assets that we are very interested in combining because these combinations of DXd-ADCs plus an internal asset appear to be quite interesting and promising based on animal data. Well, these are combinations; we are very much interested in conducting ENHERTU plus valemetostat in HER2 low breast cancer. And this is a clinical trial being done in collaboration with MD Anderson Cancer Center breast cancer group. We have many more combinations with novel assets with undisclosed mechanism of action. We hope to be able to mention more details on these combinations with novel assets that are perhaps at our next Investor Relations meeting. Next slide. And finally, I want to mention that patients who have become resistant to ADCs, particularly DXd-ADCs such as ENHERTU. This is an emerging new unmet medical need in the cancer community, particularly breast cancer and possibly in the future lung cancer as well. So we're spending a lot of time and effort now to try to understand the mechanism of resistance of cancer cells to these ADCs. By understanding the mechanism, we can develop better treatments for these patients who no longer respond to a -- to 1 DXd-ADC or another and/or you can -- we can possibly combine with other ADCs to overcome these resistance mechanisms. We can hypothetically theorize that these resistance mechanisms could be due to the target mediated resistance such as loss of antigen or payload, such as the loss of our sensitivity to the direct payload. So I think we have now a rational way to develop new drugs in these patients who are no longer responding to ENHERTU. Next slide. Okay. Finally, in the next few slides, I'd like to go over with you what we are doing here of R&D organizational standpoint, not the clinical trial data, but really what we're doing internally. And next slide. So we are creating a single global R&D group to deliver our strong pipeline. We are creating a global R&D organization because -- specifically because of our pipeline being so rich with a lot of great drugs to develop. And we're creating an organization or the organization that can do justice to these great drugs we have. So a lot of this, you don't really see when you're looking at clinical trial data. But here's a list of things we're doing here within our R&D group. We've streamlined the governance. We organized our R&D organization. We created a new function called Clinical Science. We also created a new function of global team leaders who are cross-functional team leaders. We also created a new function called Therapeutic Area Strategies function to specifically develop disease-based strategies as opposed to asset-based strategies. And we are very much interested in integrating research and clinical development, much closer relationship between research and development. And one example of that will be these mechanistic studies of resistance mechanisms that can lead to new drugs that can be studied in a clinical setting. Next slide. We are also enhancing our clinical development capabilities. Many of you are aware that we have been outsourcing many of our functions in clinical trials. We are going to start to do some in-sourcing of some of the functions to really streamline and accelerate our clinical trial program. You'll see this enhanced Phase 1 engine and enhanced preclinical, early clinical collaboration. This is kind of the same thing that we want to create a much closer relationship and interaction between our great research programs and our Phase 1 team. And also, at the same time, create Phase 1 center of excellence that can do high-quality and high throughput trials more efficiently than the selected Phase 1 centers. Next slide. Here is a summary of what we hope to be achieving with these new programs beyond the current 3 ADCs that you're aware of. By 2025, we will have started 8 new Phase 1 novel assets, including new ADCs and next-generation ADCs. And by 2025 of these 8, we will have established proof of concept or early signals from these new assets, including these next-generation ADCs. And of course, we will continue with our submission activities for in HER2 Dato, HER3 and many other programs. By 2025 we will have submitted 12 new BLAs and NDAs. And next slide. So I think I'm going to stop here with our presentation of R&D and get ready for Q&A. But you can see here our purpose and vision. We really want to be using our great research capabilities to serve patients globally by using our strength, which is really our research science and technology. So thank you very much and we are going to be ready for some questions and answers.

Now we'd like to start taking questions. I'd like to explain how you can speak up. At the bottom of the Zoom screen, you have raise hand button. So please press it, and I will appoint you. When your name is called upon, please unmute yourself and ask your questions. After you completed asking questions, please disable the raise hand button and mute yourself. So please start. The first question is from Muraoka Shinichiro from Morgan Stanley Securities.

I am Muraoka from Morgan Stanley. In the presentation, you didn't really mention HER3-DXd. You didn't talk about HER3 DXd so much. On Page 53, and that's appendix, if I take a look at Page 53 and Page 54, between January to March, HER3 has now Lung01 study results are going to come out. This is very much brought forward in terms of the timing. So the results are going to come out earlier than expected. What is the background of that? What are your expectations? And if the results are positive, I'm sure you are going to go ahead with the approval application. But are you going to promote this on your own?

As you know, currently, this HER3 program is being run by ourselves only without a partner. And yes, as you have mentioned that we do have a registration trial going on. And it's -- we expect to see the data readout on the initial one in the second half of 2022. It's a very exciting program for EGFR-mutated patients who have previously been treated with EGFR mutations agents such as osimertinib.

So I have other questions on HER3. How at least combination first-line treatment clinical trial is ongoing right now. And if I take a look at the clinicaltrial.gov, January 2024 is the timing for the results to come out of this study. And compared to the official schedule, you are announcing, this can be brought forward much earlier. Can I have that expectation for that as well?

So we are still conducting our Phase1 trial, the combination of the TAGRISSO plus the HER3 DXd-ADC. I don't think we have actually announced when we will be initiating the Phase 3 program. I think we want to make some decisions based on what we see with the combination data first of Phase 1 trial.

My last question on the discussion goes to Manabe Sunao. Manabe Sunao, the clinical trial results are very good. And R&D expense is JPY 1.5 trillion for 5 years. And of course, this is affected by ForEx rates. But this is going to increase; that's what I think. To what extent do you think?

Yes, Manabe, I would like to answer that question. So because of the depreciation of yen and that has to be factored in. But the results are very positive out of those clinical trials. So yes, we are expecting that R&D expenses may go up, but then that's not incorporated into the budget yet. So we are going to be flexible. But we are still keeping the budget that's been already planned.

So you're talking about a slight increase. Is that the range you are thinking of?

Well, we are still reviewing. So we'll probably have an opportunity in the future. So I would say, at this moment, a slight increase is expected.

Next, JPMorgan, Mr. Wakao, please.

Wakao, from JPMorgan. Page 43, I have a question on that. And because of the TROPION-Lung03 study, through 07, 08, you're very confident about it, I was able to understand it clearly. You are aiming for earlier stages. Regarding the earlier stages, you have performed a Phase 1 study. And then Phase 2 will be performing after that. Early-stage development strategy is something I'd like to know more. And also TROPION-Lung01 study, how confident are you 07 and 08, you're very confident about those studies. Monotherapy Lung01 data will become available. So how confident are you? The study's success is already taken for granted, that's my first question.

Okay. I think you've had a couple of different questions in your first question. I think your first part of the question was about early stage lung cancer, if I remember correctly. And so we haven't announced any plans to do Stage 1 through 3 lung cancer as of yet. At the moment we are still focused on metastatic lung cancer Stage 4 and the TROPION programs are listed there. Now I think you asked about our confidence level in TROPION-Lung01? This is a clinical trial in the patients with relapsed disease. And based on -- I mean we know quite a bit about how data works in patients with non-small cell lung cancer relapse disease. And so I think we're pretty confident that we will be better in the control arm in this clinical trial, which is taxane. And Mark, do you want to have any additional comments on this, Mark?

Yes. Sure, Ken. I think the confidence comes from data we previously presented with our TROP2 ADC, Dato-DXd in a very advanced non-small cell lung cancer population with a response rate of 26% and a median duration of response that was between 10, 11 months. So with this and considering the activity we've seen in the earlier trial and considering in the control group here is a cytotoxic chemotherapy agent, that we know well. We do have confidence in this. Thank you.

Next, Page 41, to IHC-0. In terms of the number of patients, that's about 20%, 30% to HER2 negative adjuvant first-line therapy. What is the target you're going to develop here, no possibility of development here, what to do with this space?

Okay. Yes. So I think you're asking about HER2 IHC0, adjuvant, neoadjuvant, something. Is that correct?

Yes, you're right.

Okay. So this is a patient population where patients are typically not responsive very much the chemotherapy. These are the mostly patients who receive hormone manipulation. And so at the moment, we are interested in explore -- of course, exploring the use of data, for example, in this HER2 IHC0 patient population. But I think we need to see some data before we really dive into a big program in this patient population. Mark, any more comments?

Yes. Ken, I could just second what you say that I think with the IHC0 population, it's a place where we've seen basically in a fully triple-negative breast cancer population. And as Ken presented, we've seen very clear proof of concept. And we've seen that with Dato-DXd, not only as a monotherapy but also in combination with immunotherapy as we show the BEGONIA data. So I do think we don't have yet any, let's say, a very early plan for a trial with Dato-DXd. But you did see that Ken did mention in this triple-negative population. We've just launched a new trial in the post-neoadjuvant setting with or high-risk adjuvant setting, Phase3 trial TROPION-Breast03. So this is an example of where we could use our pipeline to address a population of patients that is triple-negative that does include the IHC0 population.

DESTINY-Breast07 was not presented, but you presented the symposium. First line, patients are the target population. As for the abstract CLEOPATRA study ORR was not so different. In the poster presentation, there was an update and further improvement, I think. As of now, the number of patients is still small. So just with this data, it may be difficult to say anything definitive. But based on these results, for the first line, and had how confident are you? And if monotherapy data is better, monotherapy and combination, which is better, do you have any comments on that?

I think we're still waiting for more data in that patient population before we make any major decisions here.

Next is Yamaguchi from Citigroup Securities.

The first quick question is -- I just learned about more background of TROPION-Lung01 on the chemo arm. And you said that you understand those treatment very well. Can you give me as a background what is the typical PFS for those -- the arm which you're trying to compare?

Okay. So this is the question about TL-01. And as you are aware, this is -- the control arm has been studied in many different clinical trials, including most recently new trial data, there was a report, I think it was at ESMO, so some new trial with the same control arm. And so we are aware of these many different numbers that are floating out there. And we have taken that into account in our clinical trial. Mark?

Ken, I think you've said it. Certainly what we've seen over time is we've seen with the report of the clinical trials with dose attacks on the control arm; we've seen some increase in the PFS. And certainly, historically, had been less than 4 months, now it has crept up over 4 months. So as stated by Ken, we've -- we're taking consideration of this data as it evolves. Thank you.

And the second question quickly. Did you talk about 7300 and which you have very excited about it, I guess. But it's just a nuance, but you seem to be excited more on the -- at the moment, because you have more data rather than the prostate cancer, is that correct? And is that correct is that anyway to accelerate the pathway, open the development of 7300 after you're going to see some early data in the future?

So 7300 is that -- rather than unusual drug and that B7-H3 is widely expressed. And the Phase 1 trial is enrolling all comers' cancers. And what we are doing is really is to look at individual cancer patients that enroll. And as soon as we see a signal in a particular type of cancer, we start to do some work in a particular cancer setting. And by coincidence, there were large numbers of small cell lung cancer patients who enrolled in this trial. So we were able to get a good signal in this cancer type. There's also means as we go along with this program, we'll probably see more signals in more cancer types, prostate cancer certainly looks like it's going to be a good one. There's going to be the other ones too, I suspect. Squamous cell non-small cell lung cancer looks very interesting. And so there's going to be more as time progresses in my guess.

Okay. So finally quick comment please on the DBLC, you presented PFS last year and you upgrade OS this year and updated PFS as well. Of course, due to the nature of PFS and OS, that hazard ratio for PFS is really, really strong or hazardous ratio always is very still strong but numerically is lower. So that happened all the time. But is it kind of in-line with your expectation from a scientific standpoint or is better or less that you expected on the OS hazardous ratio is concerned?

Yes. The observation that you just had, that has a ratio, is much smaller with the PFS compared to OS. That's a typical observation that's seen in almost every single Phase 3 clinical trial. And that's -- why is that? And I think it's because with overall survival, these patients who relapsed after receiving 1 of the 2 drugs in the treatment. They have the opportunity to receive many, many other treatments. And so, I mean, this is the reason why the overall survival is a reflection not only about the 2 drugs that are being studied, but all the other subsequent drugs that these patients received at the time of progression.

So it's -- in a sense that the given the current status of the treatment is not really that surprising, because of this difference?

Yes. So this is what we expected typically that the hazard ratio is smaller with the overall supply.

Do you agree Mark on this one?

Yes, agree. Thank you.

Next, Daiwa Securities, Mr. Hashiguchi, please.

Hashiguchi speaking. Page 44, HER2 low breast cancer in HER and is there any development could occur. I'd like to know the theoretical background for this combination. Why do the -- there are so many candidates for combinations, but out of them, why elemental start. This combination is promising why in HER2 low breast cancer. Please explain the scientific background. And in the second half of this year, first subject dosed dosing is scheduled in the second half this fiscal year. Is this going to be an exploratory Phase 1 study? Or from the beginning, is it going to be a confirmatory-like study in your planning or treatment lines, what it's going to be the population of patients in what stages?

Okay. So in terms of the scientific rationale for this combination, I have to say that I can only say, we've studied intertie combination with various combination partners. And interestingly, Valemetostat turned out to be a very good partner for in HER to in this kind of breast cancer in animal models. Now the reason why it's -- it's a synergistic combination within HER2? I don't think we'd yet fully know. I think one could certainly hypothesize that Valemetostat being an epigenetic agent is able to up regulate certain genes that sensitize breast cancer cells to the action of the rest recap. I think that's a possibility. And this is really intended to be an exploratory signal-seeking study. And we'll do a dose escalation Phase 1 study first followed by an expansion phase.

Next from Mitsubishi UFJ Morgan Stanley, Kumagai, please.

Kumagai speaking. And this is an extension on the Muraoka's question. It's about midterm management plan. And so I think the assets potentials are going up because of the good results. But are you going to think about updating your numbers -- management numbers?

Manabe would like to answer your questions. So including earning expenses and also revenues, we are right now reviewing these numbers. So once we fix the numbers in the fiscal year next year, if everything goes well, we'll be able to update those numbers. Thank you very much.

Secondly, that TROPION-PanTumor01 study, there is a high incidence of stomatitis. Is it manageable? I'd like to know?

Yes. The stomatitis appears to be unique to Dato-DXd and not typically seen with other DXd-ADCs. And yes, it is manageable. Mark, any comments from you there?

Thanks, just to add that, it typically occurs at a lower grade. And we do have a dose modification protocol dedicated to this. We're also looking to understand what is, the optimum treatment strategy in terms of oral agents that can support this. But so far, we found that the stomatitis does not have much impact on the kind of the trials and is manageable.

Last question, Page 48. Phase 1 center of excellence is the term you used, comprehensive, cost effective Phase 1 trial conduct. That is being mentioned. How is it different from the past model? That's all for me.

What we want to be doing here is to start Phase 1 clinical trials quickly and at centers that can specialize in Phase 1 programs. Why are we doing this? The reason is that as you just heard previously, we have a lot of things in our research pipeline that is coming up into clinical stains in the next few years. We think that this is very important for the future of our oncology program beyond the DXd-ADC programs that you heard. So for this reason, we're putting a lot of emphasis on our Phase 1 centers. These are going to be selected centers that have done Phase 1 trials. And as you know, Phase 1 trials are very different in operational conduct compared to a typical Phase 2 or Phase 3 trial. We want to open them quickly because as I said, we are very interested in getting a clinical signal. And we want to be able to ensure that we obtain appropriate biopsies for pharmacodynamics measurements and the biomarker analysis. And not every center is able to do those things. Mark, any more comments to add on this?

Ken, I think you've largely covered it. I would just add that -- and I think, Ken, you alluded to that in the initial presentation that what we seek to do is also bring more of our, let's say, medical mooring and conduct in-house as opposed to relying on contract research organization or CRO, hat's also part of it.

This is going to be the last question. Credit Suisse Securities, Mr. Sakai, please.

Sakai from Credit Suisse. I have 2 questions. The first question, I'm going to asking you, because and regarding to a comment from U.S. oncologists. So I don't know if this is the consensus that his comment that following that this neo breast all for result. My practice is now being praised a greater emphasis on the patient with IHC01 and part 2 positive breast cancer. Did this common, I mean, what's there's behind this practice, can you elaborate?

Okay. I want to make sure I understand your question. I think you asked about patients with breast cancer whose HER2 status is IHC0 or 01, is that correct?

I think the slide 41, I think that regarding and what is regarding to this slide. Have it positive or IHC0 or plus 1, this category of patients? Okay. And a concern from the doctors is that there a concern -- not concern, it's practice, putting great emphasis on this category of the patient after the succession breast for 04 result. So that's a positive comment, that's a positive move.

Okay. Okay. I understand. Okay. Yes, we have received a lot of comments similar to what you heard from oncologists. The reason is that we now have a whole new category of patients who are HER2 low. And there is a very good treatment for these patients, namely in HER2. What's very tricky here is that HER2 low represent a pathological diagnosis that the previously wasn't a major concern when treatment selection was being made by the physician. But I do want to mention that, for example, there's a -- how do you, for example, make a difference between -- or distinction between HER2 low and HER2 0? HER2 low, the lower limit is very faint staining of the tumor cells in 2% of the cells. So if we are at 9% faint staining, that's not HER2 low anymore. That's a HER2 -- it's in that category on this slide here where it says HER2 IHC greater than 0, but less than 1 plus. So there is a kind of a very subtle and possibly an artificial border line between HER2 low and less than HER2 low. So yes, there's a tremendous interest among the physicians to treat these fairly large numbers of patients with HER2 low. But they have to be remembering that there is a nuance between HER2 low, which wasn't really reported previously on pathology reports. And there's -- the difference between HER2 low and HER2 less than low, I guess, that's how I like to describe it. Did I answer your question?

So I think you're saying the [indiscernible] analysis could be very important going forward?

Well, I think that the DB04 data is very clear that in the HER2 low patient population, in HER2 is superior to our study in the control. I think what is going to be the important nuance for the physician is to be able to understand the pathology reports. He may need to get assistance from the pathologist himself because previously the pathology reports mostly reported that they were -- patients were HER2 positive or negative because the HER2 low category did not exist previously.

So we are past time. So we'd like to conclude the Daiichi Sankyo R&D Day. Thank you very much. Thank you very much, everyone.

Thank you very much.