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

[Interpreted] Hello, I'm Manabe. Thank you for joining us today for the Daiichi Sankyo ENHERTU business briefing. We, at Daiichi Sankyo are committed to continuously create innovative drugs and provide medicines that meet diverse medical needs. And by doing so, our goal is to become one of the top 10 global companies in the oncology field by 2030. To, ENHERTU, an anticancer agent discovered and developed using our propriety DXd ADC technology is contributing to the treatment of breast cancer and many other cancer patients in the United States, Europe, Japan, Asia and Latin America as well as other countries and regions. Today, Ken Keller, Head of Oncology Business Unit, will explain expectations for further growth, including the maximization of the product value of ENHERTU through the acquisition and promotion of new indications. And in fiscal 2024, starting this April and beyond, so we will launch several DXd ADC products following ENHERTU and we are preparing for the start of sales promotion. So through the continuous launch of products that address unmet medical needs, we will expand opportunities to contribute to the treatment of cancer patients, which will be explained today. Our fifth midterm business plan is from FY 2021 to FY 2025. And next month, we will be entering into the fourth year. Our efforts to date to maximize the product value of ENHERTU and development of ADC products to follow ENHERTU have progress beyond our expectations, and we are confident that we will achieve our goal 2025 of mid business terms -- business plan to become an advanced global drug discovery company with strength in cancer. So we are more confident in our ability to achieve our goal of becoming global drug discovery company. We will continue to challenge ourselves to being our innovative products for more patients in need of new treatment on that quickly as possible. So that's all. So I will turn the floor over to Ken-san -- Ken Keller.

Thank you very much, Manabe-san. Please go to the next slide. As Manabe-san mentioned, my name is Ken Keller, I'm the Global Head of the Oncology business unit within Daiichi-Sankyo. It is my pleasure to share an update on our progress and to provide you with our expectations for the future. Next slide, please. Daiichi Sankyo is rapidly transforming itself into a global oncology leader. Our foundation is strong and getting stronger with ENHERTU as its base. ENHERTU's revenue exceeds $2.5 billion per annum. The Global Oncology Business Foundation has been established across the world. We now have excellent talent and capabilities in place in all regions with sales, medical affairs, access, payer professionals, government affairs, regulatory, manufacturing and safety teams amongst many others, all working together as one to deliver ENHERTU to patients across the globe and to develop our pipeline ADCs quickly and bring them to patients as fast as possible. Our teams are executing at a high level of performance as demonstrated by ENHERTU having achieved the market leadership position in all 4 of its indications in every country it has been fully launched in. We are delivering continued growth in our early launch countries, which have high market penetration, and we are accelerating growth rates in later launch countries, which are in the earlier stages of launch and have lower penetration rates. We have multiple major and highly meaningful growth opportunities maturing in the next 3 years and beyond. We are prepared to optimize these near- and long-term growth opportunities. These new ENHERTU growth catalysts begin with ENHERTU's tumor-agnostic indication, which is currently under review at the FDA with the PDUFA date of May 30, 2024. This follows receipt of the breakthrough therapy designation, which was granted in 2023. We have completed enrollment and are expecting top line results this calendar year for 2 new indications in large patient populations with high unmet need who would benefit from earlier use of ENHERTU. The first one is HER2 low post endocrine therapy. This is based on the results of DESTINY-Breast06. The second one is our HER2 first-line metastatic breast cancer based on DESTINY-Breast09. If successful, these 2 new indications are expected to be obtained in fiscal year 2025. In addition to the multiple ENHERTU growth catalysts, we have an expanding near-term oncology portfolio. The patritumab deruxtecan, which is our HER3-DXd ADC, the application has been submitted and accepted for review by the FDA for EGFR-mutated non-small cell lung cancer. Our team in the U.S. is currently preparing for the launch of HER3-DXd along with our partner, Merck. Preparation has been going very well and we look forward to bringing this drug to patients who urgently need new treatment options, assuming FDA approval. Dato-DXd, our TROP2 DXd ADC has been submitted and accepted for review by the FDA and EMA in second line metastatic non-small cell lung cancer and metastatic breast cancer. In non-small cell lung cancer, the PDUFA date is December 20, 2024. We are seeking these approvals based on the TROPION-Lung01 and TROPION-Breast01 trial results, which were presented at ESMO in 2023. If approved, Dato-DXD would be the first Trop-2-directed antibody drug conjugate approved for the treatment of lung cancer. Next slide. Since ENHERTU's first approval in 2019, we have experienced rapid adoption across all indications in all countries across the globe. This reflects ENHERTU's impressive clinical data, the boldness of our clinical trial program and strong commercial execution. Coupling these 3 drivers together has resulted in ENHERTU achieving #1 market share in all 4 of these indications in all countries. We have accomplished this in a matter of months, not years once access has been obtained in each country. Today, ENHERTU is recognized as a transformative medicine and standard of care in all of its indications. ENHERTU is now available in over 55 countries, year-over-year growth is over 70%. In fiscal 2023, revenue will exceed $2.3 billion with the U.S. and Europe leading the way. Additionally, excellent growth is also reported in Japan, and our ASCA regions. Most importantly, we have brought new hope and more time to over 80,000 patients across the globe. This is a testament to ENHERTU's best-in-class efficacy and the effectiveness of the teams at Daiichi Sankyo and our partner, AstraZeneca. ENHERTU is a remarkable medicine and our ongoing clinical program is designed to further expand its clinical utility and help more patients live longer, better quality lives in multiple tumor types and in earlier lines of therapy. Next slide, please. We have reported impressive global net revenue growth in 2020, 2021, 2022 and 2023. This growth continues in all regions. Global net sales have exceeded JPY 100 billion per quarter for the first time last quarter. Overall, Global net sales in Q3 fiscal year 2023 were JPY 102.6 billion. That's plus 12% sequentially quarter-over-quarter growth, driven by ASCA and Europe. In the U.S. Q3 fiscal 2023 revenue was JPY 57 billion, plus 5% versus prior quarter, plus JPY 12.5 billion, 28% growth versus the prior year. In Europe, Q3 fiscal 2023 revenue was JPY 25.5 billion, plus 19% versus prior quarter, plus JPY 16.9 billion or 196% versus the prior year. We expect continued ENHERTU growth in its current indications as opportunities remain to help more patients in all 4 indications. I will explain these growth opportunities for the 2 largest indications in the next 2 slides. Next slide, please. Significant growth opportunities remain in the current HER2-positive second-line metastatic breast cancer indication. In this setting, ENHERTU's adoption curve is strikingly similar throughout the world. As I mentioned earlier, ENHERTU rapidly becomes the market leader once access is obtained. Its growth trajectory is steep as it reaches 50% to 60% market share of the HER2 positive second-line metastatic breast cancer patient population. Once it reaches this high adoption level, the growth continues at a less steep trajectory. Today, we have a few countries with market share now approaching or above 70%, which we view as obtainable in many other countries. Today, we have 3 broad categories of countries in different stages of this adoption curve. Category 1 is higher adopter countries in which ENHERTU is the dominant market leader. In these countries, oncologists rate ENHERTU as most efficacious treatment option. Real-world experience matches the impressive clinical trial results. Experience has strengthened the oncology community's confidence in managing the safety profile of ENHERTU. And these oncologists report that they expect to use more ENHERTU in the future. Access in this category is supportive of appropriate use. And these countries include the U.S., France and Italy. Category 2 is growth mode countries. In these countries, ENHERTU is also the market leader but they are in the steep part of the adoption curve. The majority of these countries are in the earlier phase of product launch compared to high adopters and this is usually due to the timing of when they obtained access. Their experiences are universally positive and oncologists expect much greater use in the future. We expect these countries will follow the same trajectory path of tire adopters. And Japan, Germany, Spain, and the U.K. are in this category. In Category 3, these are the recent or not launched yet countries and securing access is necessary, and it can be slower than in other countries. Oncologists in these countries are eagerly awaiting ENHERTU's availability. Once access is secured, adoption will increase. We have seen that the country is launching later actually experienced an even steeper and faster adoption curve than earlier countries. We understand this is due to the greater comfort these oncologists have after having watched their peers across the world embrace ENHERTU and they leverage their global peers real-world experiences. Next slide, please. Now I will talk about the HER2-low indication. The HER2-low indication follows a similar pattern. In high adopters country the use of ENHERTU in post endocrine therapy post CK 4/6 inhibitors and chemotherapy. That is the standard of care. Patients routinely receive 2 lines of endocrine therapy prior to moving to chemotherapy. Oncologist perceived first-line chemotherapy after endocrine therapy as really suboptimal. And they are eager to see the results of DESTINY-Breast06, which is expected later this year. The U.S. falls into this high adopter category. In growth mode countries, these generally have obtained market access more recently and hence, are in the earlier part of the adoption curve. A distinguishing characteristic of some of the oncologists in this segment is that they routinely cycle through multiple lines of endocrine therapy, sometimes 2 and 3 prior to chemotherapy. Early experiences are positive and the expectation of oncologists is a far greater use in the future. We expect to see all the countries. In the growth mode category, we expect them to reach the levels of the high adopting country. It's just a matter of time. Japan, France and Germany fall into this category. Recent or not launched yet countries here, securing access is necessary and the speed of obtaining access varies country by country. So today, there are countries that have not yet obtained access for ENHERTU in their HER2 low indication. We are confident in our ability to secure appropriate access in these countries in 2024. In fact, we have multiple countries in the final stages of access negotiations. Oncologists in these countries are eagerly awaiting in ENHERTU's availability. Once access is secure, adoption will increase quickly. Italy and Spain fall into this category. Now there are also specific patient types that have more opportunity to penetrate in the future. Today, there is hesitation amongst a minority of oncologists to treat more elderly patients and patients with slow progressing disease. We will continue to educate these physicians based on ENHERTU's clinical trial results, which demonstrate a consistent magnitude of benefit across all patient segments. We believe greater experience in the real world will further motivate use in these patient segments. Next slide, please. ENHERTU, we will realize multiple growth catalysts in the near term beginning in 2024. Our supplemental BLA for ENHERTU has been accepted and granted prior review in the U.S. for the treatment of adult patients with unresectable or metastatic HER2-positive immunohistochemistry, IHC 3+ solid tumors who have received prior treatment or who have no satisfactory alternative treatment. This supplemental BLA is based on data from the DESTINY-PanTumor02 Phase II trial, where ENHERTU demonstrated clinically meaningful and durable responses leading to clinically meaningful survival benefit in previously treated patients across their HER2-expressing metastatic solid tumor landscape including biliary tract, bladder, cervical, endometrial, ovarian and other tumors. If approved ENHERTU would become the first HER2-directed therapy and antibody drug conjugate with a tumor agnostic indication, providing patients with a potentially new treatment option. Fiscal 2025 is going to be a monumental year for ENHERTU. Few drugs in their whole lifetime obtain a number of indications, we may obtain in just the year 2025. ENHERTU may have up to 5 new indications: number one, HER2-low post-endocrine therapy, metastatic breast cancer, based on the results from DESTINY-Breast06. Number 2, HER2-positive first-line metastatic breast cancer based on DESTINY-Breast09. Number three, HER2 mutant first-line non-small cell lung cancer based on DESTINY-Lung04. Number four, HER2-positive neoadjuvant breast cancer based on DESTINY-Breast11; and number five, HER2-positive second-line metastatic gastric cancer based on DESTINY-Gastric04. Then, in fiscal year 2026, HER2-positive, high-risk adjuvant breast cancer based on DESTINY-Breast05. In total, there are 7 potentially standard of care-changing indications for ENHERTU in the next 3 years, which would bring the total number of ENHERTU indications to 11. Next slide, please. If all approved, new indications for ENHERTU will more than double the patients eligible for ENHERTU in 2026. And now I'll talk a little bit about each of these. DESTINY-PanTumor02 study included biliary tract cancers, bladder, cervical, endometrial, ovarian and pancreatic. In all patients, the overall response rate was 37.1%. The duration of response was 13 months. In patients with HER2 IH 3+ expression, the overall response rate was 61.3%, and the duration of response was 22 months. The median progression-free survival was 11.9 months. The oncology community find these data highly compelling and if approved, we believe it will be a major shift in how the oncology community thinks about cancer care. There are approximately 10,000 patients in the major markets. HER2 low post endocrine treatments based on DESTINY-Breast06 if successful, may displace chemotherapy and move ENHERTU one line up in therapy sequence. Oncologists are eager to embrace ENHERTU in this earlier line of treatment, and we expect rapid adoption, if successful, based on their positive experiences within current HER2 low post-chemotherapy indication. The number of patients is approximately 18,000 patients. The next indication is our HER2 positive first-line metastatic breast cancer. This is based on a Phase III global multi-centered randomized trial, investigating ENHERTU with or without pertuzumab versus a taxane, trastuzumab, and pertuzumab, THP is the acronym in first-line HER2-positive metastatic breast cancer. THP, which is docetaxel chemotherapy agent, trastuzumab and pertuzumab has been the standard of care since the original New England Journal of Medicine Publication in 2025. This indication would add approximately 8,000 patients to the patients ENHERTU can help. The next indication is HER2 positive, high-risk adjuvant breast cancer based on DESTINY-Breast05. HER2-positive early breast cancer patients, these are patients with residual disease following neoadjuvant therapy, and inoperable at breast cancer presentation. This is our largest trial to date, enrolling 1,600 patients. Patients received 14 cycles of ENHERTU. The primary endpoint is IDFS, which is invasive disease-free survival, and there are approximately 10,000 patients in this indication. The next indication is HER2 mutant first-line non-small cell lung cancer. This is based on DESTINY-Lung04 trial in which we randomized ENHERTU versus platinum-based chemotherapy plus immunotherapy in first-line HER2 mutant non-small cell lung cancer. The number of patients is approximately 2,000. The next indication is for HER2-positive breast cancer neoadjuvant indication, and this is based on our DESTINY-Breast11 study. This is a Phase III randomized open-label trial, investigating neoadjuvant ENHERTU monotherapy or ENHERTU followed by THP versus AC plus THP, ACs chemotherapy in patients with high-risk HER2-positive early-stage breast cancer. The primary endpoint is pathological complete response, which means the absence of active cancer cells prior to therapy -- prior to surgery. There are approximately 27,000 patients in this indication. The last new indication we may receive in fiscal 2025 is HER2-positive second-line metastatic gastric cancer. This is based on DESTINY-Gastric04 with approximately 3,000 patients. These indications represent a large opportunity for ENHERTU to help more patients and change the standard of care many, many times very quickly. Next slide, please. The eligible patient opportunity for ENHERTU will grow to more than 100,000 patients in 2026 assuming these trials are successful. And that is in a single year. This is approximately a fourfold increase from fiscal year 2023. So we are going to be very busy, and we're going to be ready. The potential of ENHERTU to help patients is so great. We all at Daiichi Sankyo feel a sense of urgency and accountability to deliver, and we will. That is the ENHERTU plan for the next 3 years. But that is only the start of the Daiichi Sankyo oncology story. Next slide, please. We have 13 new portfolio growth catalysts in the next 3 years. In addition to ENHERTU, we have filed the BLA for our HER3-DXd, and it has been accepted for review by the FDA. This is based on the HERTHENA-Lung01 trial in third-line patients post TKI therapy and chemotherapy. As I mentioned earlier, the PDUFA date is in May of this year. In 2026, the second indication for our HER3-DXd is expected based on the results of our HERTHENA-Lung02 trial. This trial compares patritumab deruxtecan HER3-DXd to platinum chemotherapy in metastatic EGFR-mutated non-small cell lung cancer post TKI therapy. So similar to DBO6, where we move from post chemo to displacing chemo. In this trial, we moved from the initial indication in the U.S. post chemo to then displacing chemotherapy. These data for HERTHENA-Lung02, if successful, would be the basis of a regulatory filing in Europe as well. Then we have Dato-DXd's non-small cell lung cancer indication, which we are seeking approval in the U.S. at the end of this year and breast cancer at the beginning of fiscal 2025. Both the TROPION-Lung01, which is the non-small cell lung cancer trial results, and the HER2 -- the HR-positive HER2-negative TROPION-Breast01 trials, those results were presented at ESMO in 2023. These 2 indications for Dato-DXd will be followed by a third indication in triple-negative breast cancer. Our teams are working diligently to prepare to bring all these new indications to the oncology community along with our partners at AstraZeneca and Merck. For the 3 drugs I just mentioned, I will share more details on the marketplace and our expectations in the next few slides. Next slide, please. So first, I'd like to talk about our HER3-DXd and the HERTHENA-Lung01 trial. This trial is in patients with advanced EGFR-mutated non-small cell lung cancer, previously treated with an EGFR TKI, the standard of care is osimertinib and platinum-based chemotherapy. After disease progression on an EGFR TKI therapy, patients are usually treated with platinum-based chemotherapy. Salvage therapy after disease progression has very limited efficacy. Recent retrospective and real-world analysis of salvage therapy in patients with EGFR mutated non-small cell lung cancer after TKI failure reports medium progression-free survival in the range of 2.8 to 3.3 months within -- with our HER3-DXd, which is given every 3 weeks, we've demonstrated a confirmed overall response rate by BICR of 29.8%. The duration of response was 6.4 months. Median progressive-free survival was 5.5 months and median overall survival was 11.9 months. Impressively, in patients with non-irradiated brain metastasis at baseline the confirmed CNS overall response rate was 33.3%. A finding that oncologists find highly compelling and are enthusiastic about adding to their treatment options. Next slide, please. Here, I'm going to talk about Dato-DXd and the TROPION-Lung01 opportunity. A significant unmet need exists in second-line non-squamous non-small cell lung cancer patients as the current standard of care chemotherapy in this setting provides modest benefits at best. Unfortunately, progress in improving upon this sub-optimal standard of care, which has been docetaxel for over a decade, has been very difficult. Over the past few years, there has been 7 failed studies of many different agents versus docetaxel in this setting, 7 failed studies. The BLA for Dato-DXd in non-small cell lung cancer is based on the results from the pivotal TROPION-Lung01 Phase III trial, which was presented at the Presidential Symposia at ESMO in 2023. In this trial, Dato-DXd is the first ADC to demonstrate a statistically significant improvement for the primary endpoint of progression-free survival compared to docetaxel, the current standard of care. For the dual primary end point of overall survival, interim results numerically favored Dato-DXd over docetaxel in the overall population. However, results did not reach statistical significance at the time of the data cutoff. In patients with non-squamous non-small cell lung cancer, Dato-DXd showed a clinically meaningful progression-free survival benefit and a numerically favorable overall survival trend. Dato-DXd demonstrated a 5.6 months progression-free survival compared to 3.7 months a hazard ratio of 0.63 compared to docetaxel. Dato-DXd overall response rate was 31.2% versus 12.8%. Dato-DXd demonstrated fewer grade 3 severe adverse events and the interim overall survival findings favored Dato-DXd and this trial is continuing to the final analysis. In the major markets, this opportunity represents 80,000 patients. Next slide, please. Now I'm going to talk about Dato-DXd TROPION-Breast01 opportunity. And this is in HR positive HER2 negative and HER2 low patients. There remains unmet need in the HR-positive HER2-negative breast cancer population who progress on endocrine therapy and who were treated with chemotherapy. The marketed TROP2 ADC is currently indicated for later lines of therapy, patients with 2 or more lines of therapy. In this study, TROPION-Breast01, we enrolled 732 patients with inoperable or metastatic hormone receptor positive HER2-negative breast cancer who experienced disease progression on or who are unsuitable for endocrine therapy and who had previously received 1 or 2 lines of chemotherapy. Patients were randomly assigned to receive Dato-DXd every 3 weeks or the investigator's choice of chemotherapy. Dual primary endpoints were progression-free survival by blinded independent central review and overall survival. In this trial, Dato-DXd significantly improved progression-free survival over standard chemotherapy. Median progression-free survival was 6.9 months with Dato-DXd versus 4.9 months with chemotherapy, a hazard ratio of 0.63. The response rate was 36.4% with Dato-DXd and 22.9% with chemotherapy. Overall survival is not mature but a trend favoring Dato-DXd the hazard ratio of 0.84 was observed. Dato-DXd demonstrated a favorable safety profile with no new safety signals. In general, we saw the rate of grade 3 adverse events were lower in the Dato-DXd arm, less than half as compared to the control arm, 21% versus 45%. Additionally, the rate of treatment interruption was lower with Dato-DXD at 12% versus 25% for the control arm. If approved, we are confident Dato-DXd will be viewed as a valuable addition to the oncologist treatment options. Next slide, please. Our expanding portfolio will dramatically increase our opportunities to help patients with cancer. As our portfolio drugs enter the lung cancer space, which is one of the most common cancers worldwide, the number of patients we can benefit grows dramatically. Dato-DXd's approval based on TROPION-Lung01 can address approximately 80,000 patients. Dato-DXd's approval in HR-positive HER2-negative patients based on the TROPION-Breast01 data adds 55,000 patients. HER3-DXD's approval based on HERTHENA-Lung01 adds 10,000 patients. DXd ADC's #4 and #5, which both have shown promising results in earlier trials if successfully developed in their initial indications, which is small cell lung cancer and platinum-resistant ovarian cancer will add approximately 13,000 and 8,000 patients to the overall number of patients that we can help. These indications are the planned first ones with plans for other cancers in development with our partner, Merck. Next slide, please. If all therapies are successful, our opportunity to help patients grows to over 500,000 patients with all the ENHERTU indications I mentioned, adding Dato-DXd and our HER3-DXd alone. If we go to the next slide, what I'd like to do is talk briefly about ADCs, #4 and 5. So the first 1 I'll speak about is I-DXd. This is a specifically designed potentially first-in-class, B7-H3-directed DXd antibody drug conjugate. I-DXd has potential in multiple tumor types that have broad expression of B7-H3. It has shown promising durable tumor response in patients with several types of heavily pretreated cancers, including lung, prostate and esophageal cancer. In small cell lung cancer patients, I-DXd demonstrated an overall response rate of 52.4% and which was observed in 21 patients with advanced stage small cell lung cancer. Based on these impressive responses, we have accelerated development in the small cell lung cancer second-line setting. Small cell lung cancer is an area with significant unmet need with poor patient prognosis, and there's been limited advancements in second line for many, many years. Small cell lung cancer is usually first treated with chemotherapy combinations. Typically, patients do respond to first-line chemotherapy but the duration of response is not satisfactory. When relapses occur, treatment is highly fragmented and responses are infrequent. And unfortunately, they usually don't last very long. Our DXd is our fifth DXd ADC. It targets cancers that express CDH6. Our DXd is specifically engineered in a potentially first-in-class CDH6 directed DXd ADC, and is jointly being developed by Daiichi Sankyo and our partner, Merck. Approximately 70% to 80% of patients diagnosed with ovarian cancer will have a recurrence of disease following standard treatment with platinum-based chemotherapy regimens, an estimated 65% to 85% of patients with ovarian cancer have expression of CDH6, which is associated with poor prognosis. We previously reported encouraging efficacy data and confirmed objective response rate of 46% in a subgroup of 50 patients in our Phase I trial. Median duration of response was 11.2 months and median progression-free survival was 7.9 months, and responses were observed in patients with a range of tumor CDH6 expression. Despite treatment advances, an unmet need remains in the second-line setting in platinum-resistant ovarian cancer. And in addition to this, there is an opportunity to expand our DXd by moving it from second line, which our initial studies into earlier lines of therapy. Next slide, please. By 2030, Daiichi Sankyo could have 5 marketed antibody drug conjugates in over 30 indications in over a dozen different cancer types and benefiting nearly 400,000 patients. Next slide. In our midterm plan, as Manabe-san mentioned earlier in his opening remarks, we stated our intent to grow Daiichi Sankyo to be a top 10 oncology company by 2030. In calendar year 2023, we've made significant progress. Today, Daiichi Sankyo ranks #15. Next slide, please. Of the Top 20 largest companies in oncology, Daiichi Sankyo is the fastest-growing oncology company. So today, we're #15 and with the fastest-growing top 20 oncology company in the world. Next slide. And we remain highly confident that we will reach our goal of becoming a top 10 oncology company by 2030. Thank you very much for allowing me to share our plans and expectations with you, and I'll turn it back over to Ken.

We'll now take questions. The first question is from Yamaguchi-san from Citi.

So this is a Yamaguchi from Citi. I have a few questions. First of all, thank you very much for providing us the number of the patients, which is really good at the building models. Among those things, I have a specific question on Dato-DXd TL01 penetration speed. You mentioned on the ENHERTU reaching 50% to 60% in a very quick way, that was very impressive. But do you see the same sort of penetration speed because it's only chemo space is expected from the Tier-1 Dato indications once it's approved by the end of this year? And can you give us any feedback that you have from the noncancer community about the expectation on the Dato-DXd on Tier 1?

Thank you very much for the question. So the way that we're thinking about this and what I'm hearing from the investigator community and the broader oncology community, is that in the non-squamous non-small cell lung cancer setting doctors have been using docetaxel, basically monotherapy for over a decade, even than longer, probably closer to 15, 20 years. As I mentioned, many drugs have tried to improve the outcomes compared to docetaxel but everyone's failed until we shared our TL01 data. Doctors believe that docetaxel is suboptimal. They see it as a very difficult drug for their patients to tolerate. And we believe that the data that we shared with the improvements in progression-free survival and as we look at our overall survival, as that matures, and we look at the safety profile and the tolerability profile that we saw in this study, we believe that the oncology community will quickly embrace Dato-DXd, and I believe it will displace chemotherapy rather quickly.

That far, you -- it's fair to assume that the peak penetration ramp-up speed is kind of the same as ENHERTU situation, is that correct?

I'll answer it this way. I think it will become the standard of care, and I think it will become the standard of care in -- within certainly the first 15, 18 months.

Quickly second question is that, basically, you have done a great job on the breast case community marketing and then you have to expand into lung cancer. In general as far as the big kind of oncology space is concerned, are you already sort of making enough investment or staff to be ready for the lung cancer strong expansion from now on rather than breast case as far as the operating -- sorry, the marketing organization is concerned?

Yes. Thank you for the question. Yes, one of the benefits of having such an attractive DXd ADC platform is, over the past few years, the science of our DXds and the success of ENHERTU has allowed us to attract very talented people. And so we've built up our marketing, our sales team, medical affairs, really development across the organization. And today, we've got a fully highly capable team. What we've also done is we've taken -- we've already have a lung team, right? So we've been building it out based on the smaller indication of ENHERTU in HER2 mutant lung cancer. So they are getting to know the lung cancer community as we speak today. And I will also add that with Dato-DXD, which is what we're talking about, we have the benefit of working with a terrific partner AstraZeneca, who is very well known and very strong with the lung cancer physicians. So between their strength and the strength we're building, I feel very confident.

[Interpreted] Yes, I'd like to ask a question to Dr. Manabe. You're now ranking 15, you are aiming to be within top 10. Potentially, rather than top 10, you may be able to aim for top 5 but you do have competitors. So what's your image about relative ranking, top 10 or even higher?

[Interpreted] Thank you very much for your question. Originally, we are continuing to say we are aiming for top 10. So we are keeping this wording, we didn't make any revision. But including ENHERTU, we are making growth more than our expectations. So to what extent we can aim what we'd like to consider once again.

Next question is from Wakao-san, JPMorgan.

[Interpreted] This is Wakao from JPMorgan. DESTINY-06, 07 and let me confirm that data readout time line for 06. The first -- later 2024 compared the original timeline maybe April through June is expected. However, I just want to confirm if there's any change to that? And as for 07 DESTINY (sic) 08 DESTINY in the calendar year by the end of 2024, the timing -- excuse me, DESTINY08 and 09, I'm sorry.

Okay. So I believe the first question was the readout for DB06. We expect that in the first half of fiscal year 2024. And then the second question was, I think, on DB09 and DB -- okay. So in 09, we expect that this fiscal year for DB09.

This fiscal year -- so by the end of 2024.

Fiscal year 2024.

[Interpreted] ENHERTU sales, I'd like to know more about ENHERTU sales. On Page 13, here is the number of patients who could benefit HER2 low going to increase, in particular, as was explained regarding HER2-low particularly in Japan, France, Germany, these are growth mode countries, which are expected to grow. Should I understand that way? And as for the United States, by the third quarter sales trend, we're reaching a plateau more difficult to grow further it seems. But HERT outlook in FY 2024 in the United States is another question I'd like to ask you.

Thank you very much for the question. So I'll address the U.S. first. So the U.S. launched first obtained access first. It has very high market share today. However, there's still room to grow in the U.S. We expect at a different trajectory but we expect continued growth in the U.S. in a number of areas. There are patients in the U.S. where doctors are withholding ENHERTU because they see these patients as older and frailer in less good health. We can educate those doctors because in our clinical trials, we demonstrated in all categories, patients over 65, under 65, the magnitude of benefit was very similar. So we believe as doctors get more comfortable the market share and adoption will continue to increase in the U.S. but at a slower rate. When we look at other countries that are earlier in the adoption curve, some of the countries that you mentioned, we see all countries getting to that high adopter level. And there, we're talking about market share of above 60%. One thing I will add is -- I'm sorry, one thing to add is, there are a number of countries in Europe where we're still waiting for HER2 low access, that is coming on quickly, and we expect significant growth in Europe in the HER2 low indication.

[Interpreted] On Page 21, so you mentioned 5 ADCs and close to 40 -- 400,000 patients can be treated. So on that, from the peak sales perspective with each. So what could be the order of those 5 in terms of the size of the peak sales? So based on the image, you have as of now, 2023, what could be the ranking of the sales of each one?

Okay. Thank you for the question. I think that ENHERTU, if all the trials are successful, we would have 11 different indications. And today, ENHERTU is already $2.5 billion annum. So I think that gives you an idea of what ENHERTU could be. It will be one of the largest breast cancer drugs ever. In terms of others, the lung cancer space is so large in terms of number of patients. And so when you think of our drugs there, whether it be Dato-DXd in the non-squamous, 80,000 patients, I think the opportunity to help the most patients would be in lung cancer.

Next question is from Muraoka-san from Morgan Stanley.

[Interpreted] Muraoka from Morgan Stanley speaking. Can you hear me?

Yes.

[Interpreted] I also would like to ask you questions about ENHERTU, the situation in the United States. Elderly patients, older patients, you talked about slow progression patients penetration is something -- there is some room for improvement in the slow progressing patients as well, as you mentioned in the middle of the presentation. Specifically, what kind of efforts are you making right now? In other words, low-hanging fruits have been picked up already in older patients and slow progress patients are going to be harvested, to do so, what additional efforts you are making newly? I'd like to know.

So there's a number of things we're doing in the U.S., and I'll kind of -- I'll list a few of them. So one thing we're doing is physicians that have adopted ENHERTU and are using it in their elderly patients. We're having them connect and educate their peers and sharing their real-world experience. Whenever you have real-world experience that is as positive as our [indiscernible] ENHERTU, getting physicians to communicate with each other is probably the most effective education we can do. So we're doing that through speaker programs and communications like that. Second thing we're doing is we're going back to our clinical trial data and with our MSLs and our sales team, we're now cutting that data by those certain patient groups, for example, over 65 and under 65, and we're really highlighting that the efficacy ENHERTU is the same. The benefits are the same older, younger. And just by highlighting that education from our sales team to the physicians is helping as well. I think those are 2 of the big things that we're doing right now, the speaker programs, as I mentioned, and really recutting the data and showing people what that looks like.

[Interpreted] So by data age demographics, -- so would -- have that already changed the prescription behaviors of the doctors or it will take 6 months or another months for doctors to change their prescription behaviors based on that?

I think that it's -- it goes doctor by doctor. So we do speaker programs. We get a dozen physicians together. They hear it from their peers, they don't see a patient that qualifies right away. So it happens incrementally. I don't think it's going to be just a switch. I think it's -- at this point, it's more of a slow kind of growth.

[Interpreted] And also TROPION-Breast01 study, in -- rather than FY 2024 but it's going to be launched in FY 2025, as you said. So is there any delay here? The same timing with Lung or if it's delayed compared to Lung, any particular reason behind?

No, there's no delay in TB01. This is on track. It's according to the plans that we shared previously. So there's no delay there. I think it's on track.

[Interpreted] And finally, in U.S. the sales force. So I would appreciate if you share with us sales force size. So AstraZeneca will be partner and how many for breast and how many for lung cancer? So what's your -- the size -- planned size for sales force for each BC and the lung cancer?

So the makeup, and I'll talk about the U.S. -- and Europe, those launches are a little bit later, so I'll talk about the U.S. In the U.S., we have about 100 salespeople at Daiichi Sankyo that are doing breast cancer, mainly ENHERTU today, right? We also have about 100 people including reps and some MSLs for lung cancer. So we will have 2 teams, one breast, one lung, the breast team will focus on ENHERTU today. But then as Dato-DXd gets approved based on TB01, they will also bring that drug to the breast cancer physicians. And in lung cancer, today, they're focusing on the HER2 mutant ENHERTU approval. But then as Dato-DXd based on TL0, and HER3 get approved, that team will cover those drugs. AstraZeneca for breast cancer has a similar number of people. And in lung cancer, they'll have a similar number of people, okay? And then you add in Merck. Merck will have their own lung force. So for these drugs, we've got, in my mind, 2 of the probably most successful oncology companies in the last decade, AstraZeneca and Merck, working with us to bring these drugs to the oncology community. I think that optimizes the probability of our success.

[Interpreted] Thank you very much. There was so much information, I couldn't catch up. This cancer, Daiichi Sankyo 100 people, AstraZeneca 100 people, lung cancer, another 100 for each of the 2 companies, correct?

Correct.

Next question is from Sakai from UBS.

Sakai from UBS. I was keeping questions for you probably. Lung01 Dato-DXd, we're anxiously waiting for OS data toward the end of this year. Now outcome on this data, how they're going to impact your PDUFA date or probability of approval? Now we keep hearing results [indiscernible] don't really disturb the approval process because this is dual endpoint trial designed. But I'm not really buying that story 100%. So can you give me some assurance to how confident you are at this moment? That's my first question.

The -- for Dato-DXd TL01, it's a dual endpoint as you rightly pointed out, progression-free survival and overall survival. We are -- we've submitted the data. We will soon have dialogue with the FDA. And so I think in terms of what the FDA is thinking at this point, it's really too early for me and premature for me to kind of talk about that.

Right. So setting the PDUFA date in December, that is rather long wait. That means FDA waiting for OS data?

Well, we will have the OS data prior to the PDUFA date. So they will have it in their hands and I'm sure that will be a consideration for them.

Okay. Second question, DBO6 ENHERTU, if the data didn't hit the primary end point, now how is that going to impact your second line, third line and future development of ENHERTU? I think getting the -- I mean, everyone's expectation here is you're going to meet end point because ENHERTU has been so good, right? However, in the trial, anything could happen. So how do you respond to this kind of [ fishy ] for question? I'm sorry.

No, no, that's -- it's appropriate. Well, I share your confidence. We're confident that it's going to deliver because ENHERTU has such a great track record. I would think -- so -- the DB04 data, which is what our current indication is based on, that study has such an outstanding efficacy and safety profile. Just to remind everyone, in that trial, the progression-free survival was 10 months with ENHERTU and 5 months in the control arm, right, the chemotherapy. The hazard ratio was 0.51. In that trial, we showed a 6-month improvement in overall survival. Six months, and I think the hazard ratio was 0.64, if I believe. And so that data is so compelling, and it's already the standard of care. If DB06 didn't hit the end point, I don't see people changing their mind. I think they would still use DB04 as they are today. I think it's that strong. And in terms of future development, every trial you get you learn from and we would incorporate that into our thinking for other trials. But in terms of our current business, I just don't see it changing or hurting us.

But are you saying that people still use -- not still, but are going to use ENHERTU over chemo despite of the DB06 data?

Well, they wouldn't use it -- no, I'm sorry. What I meant to say is if DBO6 was not successful, it would not impact our current DBO4 business, the post therapy business. Yes. I'm sorry to confuse you. Yes, if it didn't work, I don't think people would move from chemo.

[Interpreted] Actually my question to Manabe-san. The world's top 2 oncology companies, you're working with AstraZeneca and Merck, you're collaborating with them. This may be a frequently asked question. You are going to build your own oncology franchise. Have you expressed such an intention already? Or Including these companies, you're going to deepen your experiences? Top 10 is your goal or there was a question about top 5 instead. To achieve this goal, the size of the revenue and sales is important but it's more important to secure profit. Profit sharing all the way will not satisfy the investors, what do you think?

Through the collaboration with AstraZeneca and U.S. Merck, we have accumulated experiences. Sales, revenues and profits are also increasing steadily. So for the future development, Daiichi Sankyo, hopefully, you would like to do the development on its own.

So are you going to spend your own R&D expenditure? And you're going to secure profit 100%, is my understanding correct?

Yes, that's the direction we'd like to head into the future.

Next question is from Sogi-san, Sanford Bernstein.

I have 3 questions. So first of all, the -- in terms of ENHERTU further development, can we -- we understand that there are a few data issues ongoing but can we assume that the timely ongoing Phase III probably broadly cover the potential of ENHERTU? So that's first question. The second question is Dato and also HER3-DXd. So in TL01, TL01 that provided us a quite interesting as the data on Dato-DXd. And one of the interesting data is about a strong efficacy in the AGA subpopulation -- that especially -- particularly for EGFR mutated population. And we see that you are already running the Phase II in EGRF mutated non-small cell lung cancer in combination with TAGRISSO from AstraZeneca. And how are you going to kind of manage the -- because there's an overlap with HER3-DXd ongoing HERTHENA-Lung02. And I'd like to see what is in the current -- your thinking around how to this -- the portfolio overlap? And thirdly, you have been mentioning the target cancer-type for the and I-DXd and R-DXd in terms of the expression of the target but you have also mentioned previously that the HER3-DXd indication expansion that you said that you have started looking into the cancer types regardless of HER3 expression. So we understand that now we have more understanding of how ADC works, probably the targeting cancer type just only based on the over expression of a target probably isn't -- does not really maximally leverage the efficacy or the function of ADC. So that I'd like to understand what is the moving forward future targeting strategy of cancer type for these ADCs?

Thank you very much. So the first question is about is, if I understood it, are there new clinical opportunities for ENHERTU beyond all those different indications that I've mentioned. I think there is, and I'll give you an example of that. So we expect to get the tumor-agnostic label for ENHERTU in the near future. And based on that data, when you look at especially the IH 3+,where you're looking at 61% response rates, very, very impressive. And so we believe there's opportunity now to look at HER2 expression and do like we've done with HER2 low, for example, in metastatic breast cancer, now start studying and looking at patients not in third-line pan tumor but looking at HER2 expression in second line and first line in tumors like ovarian cancer and tumors like biliary tract cancer. And so we believe there's opportunities now that we've seen such compelling data in the tumor-agnostic setting to look at treating people earlier in earlier lines. So that's a pretty big opportunity that we're considering right now. So that's my first answer. Second one is -- so you rightly point out that when you look at TL01 and you look at the impressive activity in the AGA population, a subgroup of the AGA obviously is the EGFR-mutated patients where we're also studying and hopefully will soon be approved for our HER3 drug. The way that we're looking at that this is we don't think it's a bad thing that you have multiple drugs in a single setting. For us, unfortunately, even with 50%, 60% response rates, there's still an unmet need for all of these patients. And so we're going to let the science dictate where we go. And if then you end up with multiple drugs in the same kind of patients, then physicians have more options and choices. And if one drug isn't successful, they can always go to another one. And so I guess our philosophy is let the science kind of lead us to where we go and then the market will figure it out later on. And the third one is HER3. You rightfully pointed out, and I'll give you an example of this. With DBO6, and I neglected to mention this but we have patients in the DBO6 study, which is the HER2 low where we're looking at ultra-low expresses in that setting. So that would technically be IHC 0 to 1, right? And it is what you've mentioned, which is if ENHERTU shows really good activity there, that kind of changes the paradigm of how you think about this. And there's even more opportunity. The way that we're approaching it with I-DXd and R-DXd is we're doing very robust Phase I programs in basket studies where we're studying across the number of different tumor types and that kind of clinical activity will kind of steer us in the right directions as much so or more so than just the expression level. So I said a lot. I hope I answered your questions but please, if I didn't, please ask again.

Thank you very much. This is a very clear and comprehensive question. I really appreciate it.

The last question is from Tony Ren-san, Macquarie.

Can you guys hear me?

Yes.

Tony Ren from Macquarie. Great. I just want to go back to the patient. So on slide -- in the slide, Slide 12 and 18 in particular, the -- I do have to say that common opportunity in major markets, the numbers look quite large, much larger than at least in my model. I just want to see how you guys define the eligible number of patients? Do you mean the number of patients treated using your agents? So -- and also related to that, if you go to Slide #13, did I hear correctly that Ken said that there will be 4x more patients being treated on in ENHERTU in 2026 than in 2023, just visually looking at the stacked column bar looks more like twice as much. And also, if I'm just extrapolating too much, that's really 4x the number of patients. Right now, we are running at USD 2.5 billion a year, right? So are we looking at basically $10 billion a year in our peak sales?

Okay. Thank you for those questions. So let me clarify. So the number patients is not the number of -- in those slides you mentioned, it's not the number of patients treated with in ENHERTU or other drugs. It is the patients that we could potentially treat with those indications. So it's our opportunity. All right. So sorry if I confused you there. So it's the opportunity that we could treat those. We're not going to get 100% of those, right? So I think that's an important aspect of it. And in terms of the ENHERTU number of patients, again, it's a similar question. It's the eligible patient opportunity. So with those indications, the opportunity for ENHERTU would grow to over 100,000 in 2026. So again, it is the opportunity. It's not what I'm suggesting we're going to get all of that. Does that help?

Yes, definitely. Yes. Okay. I appreciate it. And are you looking to bring the guidance up to $10 billion.

I'll let my boss to answer that.

Okay. All right, okay. Perhaps just very quickly, if you go to Slide #14, right, can I know that you said that there is no delay on DB -- sorry, TB06, sorry TROPION-Breast01. It is on schedule. Looks like TROPION-Lung01 will come before -- the approval will come before TROPION-Breast01. Is that your current understanding as well?

Yes. The PDUFA date in the U.S. is December of this year for TROPION-Lung, so that would be earlier.

We will now conclude at Daiichi Sankyo's ENHERTU Business Briefing. Thank you very much for joining today.

Thank you very much. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]