Eisai Co., Ltd. (4523) Earnings Call Transcript & Summary

[Interpreted] Now it is time to start meeting, Eisai Company Limited's conference call. Today, we'd like to talk about the accelerated approval of aducanumab given by U.S. FDA. Now without further ado, I'd like to invite Mr. Naito, our CEO, to start.

[Interpreted] Thank you. This is Naito speaking. This time around, ADUHELM has been granted approval from U.S. FDA. And upon that approval, the first thing that came to my mind was the FDA's approval of Aricept on November 25, 1996. From the date of Aricept approval to June 7, 2021, approximately 25 years have passed and words cannot describe how we are deeply moved through this challenging journey to finally have the first-in-class drug that can target an underlying pathology of Alzheimer's disease. A review of the prescribing information for Aricept, a symptomatic treatment for Alzheimer's disease and that of ADUHELM clearly shows the evolutions in disease concept, diagnosis and treatment over the past 25 years. At the time of Aricept's approval, there was no effective treatment for Alzheimer's disease. And the majority of cases in Japan were thought to be caused by aging or cerebrovascular factors. Today, it is recognized as a neurodegenerative disease that is caused by the abnormal accumulation of proteins such as amyloid beta plaques and tau and progressive -- progresses over a span of at least 10 years. Biomarker research has made great advancements in clarifying the pathophysiology of Alzheimer's disease and has become an overwhelmingly powerful tool for understanding the condition and stage of the disease. Understanding and confirming the effects of treatment and improving the accuracy of diagnosis. The prescribing information of Aricept in 1996, at the time of approval, described the results of the ADAS-Cog and CIBIC-Plus study outcomes, but there was no information about biomarkers outcomes there. In fact, biomarkers were not measured in the clinical trials of Aricept, and the methods to measure them have not been well established. In contrast, the prescribing information for ADUHELM includes biomarker information for amyloid beta plaque, CSF p-tau, CSF t-tau and evaluates clinical endpoints for CDR-SB, MMSE, ADAS-Cog 13, ADCS-ADL-MCI and NPI-10 as primary, secondary and tertiary endpoints in a multilayered manner. With regard to the pathophysiology of Alzheimer's disease, which begins with the accumulation of amyloid beta protein in the brain, followed by involvement of tau pathology and subsequent neurodegeneration, ADUHELM showed the reduction of the amyloid pathology. And its prescribing information, comprehensive evaluation of both cognitive and functional aspects like CDR-SB and relating end points such as cognitive function, quality of life and BPSD or NPI-10, relating -- were described. I believe that difference between the 2 prescribing information is a true indication of the innovative revolution of biomarker research and clinical science over the past quarter century. On the other hand, diagnostic advances have been also been extremely remarkable. Accuracy of MRI has dramatically improved, and the innovations in AD diagnosis and pathological change assessment brought about by broad research in molecular imaging such as PET are prominent. In addition, it can be said that CSF testing now provides the most multifaceted information, covering almost all stages of pathophysiology of the AD disease continuum, including amyloid beta, amyloid beta 42 to 40 ratio for tau, p-tau181 and 217 and a neurodegeneration NFL or neurofilament light or t-tau neurogranin indicators. In particular, there are high expectations for the implementation of blood biomarkers. Japan and the U.S. have made progress in the regulatory aspects of amyloid beta-related and tau-related biomarkers. Furthermore, various genome-related information, such as ApoE-related information is now rapidly emerging. And we believe that this will create a polygenic score. With these developments, the formation of a brain health panel, which will enable confirmation of the risk of onset of the disease, treatment strategies, treatment effects will form a core concept for innovation in the diagnosis, treatment and prediction of Alzheimer's disease in the future. So what is the value of Alzheimer's disease treatment targeting underlying pathology in general? For a quarter of a century, Eisai has been working closely with Alzheimer's -- patients with Alzheimer's disease and their family to understand their needs and anxieties. Through this socialization, we have come to understand the magnitude of impact for not only patients but also their families. When we think of price or pricing policy as an expression of value, we believe that it should be evaluated based on the multifaceted value of the drug. That is so-called value-based pricing. So values, benefits and various costs of patients and their families are taken into consideration. The cost related to Alzheimer's disease is characterized by the fact that the burden of nursing care and family care is greater than that of medical care itself. This includes decreases in employment and job opportunities for family members due to caregiving. Burden of care also includes the cost of staying in long-term care facilities. I believe that the overall picture of the value can be found by comprehensive evaluation of these factors. And this value-based pricing with the very separate issue from the delivery of this drug to the patients who are eligible for the treatment, that is to say how we can ensure the drug access for the patients. These are 2 separate issues. So building the price that will reflect the value of the product would really mean that it is the value of the product that is most innovative to be reflected into the price of the drug. And also, this is the essential as the concrete indicator of the innovation, whereas the policy to ensure the access of the product that has certain price. This kind of access policy would need to reflect the different systems of different countries as well as the insurance programs available. And we need to put in place various support programs and support the mechanism. And especially, we need to be able to provide these medical services to those who are relatively underserved in the social system such as low-income populations. And we need to focus on the very comprehensive initiative. So through the pricing policies, we need to represent the true value of the medicines. And through the access policies, we need to be able to deliver a product to the patients who are in need of this. And these 2 policies would not be contradicting with each other, and it is very important to achieve both goals. And again, it is probably not too much of an exaggeration to say that it will be the overarching mission of the modern pharmaceutical industry to achieve both of these goals. As for the access policy of ADUHELM, we have to pay close attention to the co-pay situations of various insurance programs in the United States. And against the underserved communities for them, we have to really think about the various measures to overcome health care divide in those communities, and we want to collaborate with the VHAs or the other retail pharmacies or NAFC. And based upon the value-based contract, we would like to really offer the various programs to lessen this burden for the patients through the health care providers contract. And also, we will be carrying out the free CSF diagnostic testing with providers and we will keep the price for the initial 4 years. And depending upon the progress of review, and we will be looking into the access policy in Asian region on a timely basis. And there, in our collaboration with the insurers for the middle income population. So we will be creating the new insurance programs, or in collaboration with the financing institutions, we will try to find a way to try to reduce the burden for the patients or we would like to revise the reinsurance key risk insurance and also for these low-income populations, want to consider the tiered pricing or the collaboration with the NGOs to provide the medicines. And through the mutual system, we would like to consider various innovative models. And currently, as the ecosystem platform, we are building the Eisai universal platform and would like to further accelerate the efforts in this regard. And so with Alzheimer's disease, modifying the treatment and medicines, they are certainly the core of the solution package of EUP. And also, our goal of EUP is to free the people of the worrisome anxieties. They would like to lead for life, even though they may be suffering from dementias or they would not want to cause any trouble to their family members or would not want to see the further aggravation of their conditions. And based upon the various signs and clinical evidence, it will be possible for us to offer many different kinds of solutions. And also going forward, we will be able to obtain the patient's biomarker data. And that should enable us to indicate a better guidance and advice to the health care providers and also through the provision of various services and benefits as through this disease awareness and diagnosis and treatment of care, we believe that we should be able to make a step forward for the resolution of chasm that we face today. And last, but not least, we are also currently working on the development of anti-protofibril lecanemab or the new anti-MTBR-tau antibody E2814 for new synapse regenerant E2511. In all of these development, we are currently working on the disease-modifying candidates that will work on the different parts of the pathophysiology with Alzheimer's disease. And based upon that, the patient's biomarker data, by properly using these drugs, we think that we can come closer to the [ best ] treatment of Alzheimer's disease. And going forward, we would like to continue with a lot more efforts so that we can continue to contribute to the patients and the family members by freeing the patients of their worries. Thank you.

Shimizu is going to talk about the pricing and access. Shimizu is the Group Officer of AD Franchise Special Mission. Mr. Shimizu, can you hear us? Please hold on a minute. The voice doesn't come through. Mr. Shimizu. Can you hear me? Mr. Shimizu, can you unmute your microphone? Please wait.

[Interpreted] Can you hear me?

Yes.

Can you hear me?

[Interpreted] Yes, we can, clear and loud. Thank you.

[Interpreted] Thank you for the trouble. Well, thank you very much for waiting. My name is Shimizu, I'm in charge of AD franchise. I'm now going to talk about pricing. For price, which is going to be value-based pricing, the multifaceted values have been considered based upon the clinical data from the clinical studies for patients, their families and caregivers in order to increase value and benefits and in order to reduce the costs related to various aspects of the disease. And considering all these, pricing is to come. And working on the pathology of Alzheimer's disease, we believe that pricing should be fair and reasonable considering this is the first-in-class such benefits -- bringing about such benefits. And in the U.S., as you know, every year, the price has been increased. But for ADUHELM, we are going to keep the price of ADUHELM for 4 years unchanged. And in order -- while reflecting the multifaceted values of the drug into the price and when it comes to the expanding access by patients to ADUHELM and copayment or out-of-pocket payment in the U.S. is considered, and we are going to introduce various programs, access support program in the U.S. is not going to be explained. For -- most of the patients with Alzheimer's disease are 65 years old or over. And according to our calculation, the target, about 85 or over, percent of the patients are covered by Medicare insurance. And most of the Medicare-insured people have the additional rider insurance policy. Therefore, regarding the -- there is already a cap on the total out-of-pocket payment. Therefore, out-of-pocket payment by patients for ADUHELM should not be significant. And Medicare, if they are disabled and if they have any financial difficulties and then draw eligible Medicaid insurance coverage, combination of Medicaid and Medicare. Therefore, there will be no out-of-pocket payment for such patients and their families. Even under such insurance coverage, there are no rider policy purchased by those patients. For such patients, on individual cases, we are going to provide consultation services for insurance coverage on an individual basis. And among them, because of the economic difficulties, if they are not able to pay or afford the drugs, there will be a free of charge provision of the drugs if conditions are met. And for those underserved community, in order to improve the health equity and veterans affairs, VAT, and [indiscernible] as has been mentioned in release, we are now finalizing the contract assessment. And with CVS Health, we are now trying to bring into the community in order to have the cognitive screening. And NAFC, National Association of Free and Charitable Clinics, with whom we are collaborating, about 1,400 clinics who are the members of NAFC for providing the cognitive screening and also care to be provided to patients. We are building such nationwide program. . When it comes to private sector insurance, the largest player, Cigna, a value-based contract is being now finalized. Based upon the value for patient, cost shall be borne as we are considering such scheme. Private sector insurer is covering the insurance for patients and for whom. In order to reduce the out-of-pocket payment for the patients, the copay program is being formed -- worked out in order to eliminate or minimize the cost burden for the patients of this drug. As said, we have prepared those programs for us promoting access to the drug. Biogen and Eisai have clearly expressed their commitments to wide access to be provided to patients. So we'd like to bring the value of ADUHELM to as many patients and their families as possible.

[Interpreted] Now we would like to start the Q&A session. [Operator Instructions] Let us begin with the first question from Nomura Securities, Mr. Kohtani. This is Mr. Kohtani from Nomura Securities.

[Interpreted] I'm Kohtani from Nomura Securities. I hope you can hear? So first of all, I have to say, congratulations to you. Up until the approval, there has been a lot of difficulties and challenges. But as Mr. Naito said, [indiscernible] and you have been able to demonstrate the consistent benefit. So Biogen was very humble. But again, the accidents -- accidental, the outcome would be 1 over 10,000. And so this was not really discussed by the advisory board. But again, this kind of biomarker result was well reviewed. So I think that was good. And I would like to ask you a question about the bottleneck of the diagnosis before the dosing. [indiscernible] MMC clinical, the judgment has to take place in MRI or this CSF kind of testing would have to take place to confirm the amyloid plug. So for the clinical evaluation, I think that you have the collaboration with [indiscernible]. And also for this -- this is testing LabCorp that you are collaborating with. . So as to the bottleneck in terms of the diagnosing of the patients, do you think that you have been able to solve all the challenges? Or do you think you have some more that you need in terms of the support for the diagnosing?

[Interpreted] Dr. Kimura, who is in charge of the scientific aspect in neurology, is going to respond.

[Interpreted] Thank you very much, Mr. Kohtani. Kimura of the Neurology Business group. I'd like to respond to your questions. As you have said, amyloid accumulations in the brain. To confirm this, currently, there are 3 different ways to achieve that. One is amyloid PET. And another one is CSF testing and another one is the blood testing. As for the amyloid PET, there are 3 different traces that have already been approved, both in Japan, United States as well as in Europe. And in U.S., MCI due to AD is also being proved to be used. And MCI due to AD in Japan, it is not really approved for the use. But Alzheimer's dementia, it is only for the indication of Alzheimer's dementia it is being approved. And also, it is not really covered in the insurance reimbursement. However, together with the members of the academia, we are getting a lot of support. And so there was the ADUHELM that has been approved, and therefore, MCI due to this additional indication, we'd like to get. And also, the insurance coverage, both in Japan and the United States, we believe would come very soon. As for the PET trace, so for the number of PET, 1,800 in the United States and also 600 units in Japan. So divided by the population, both in Japan as well as in United States, it's going to be about 4 to 5 units per 1 million populations. Of course, PET scales in FDG PET. And also for the cancer tracing, this kind of PET device can be used. And therefore, the number of PET would not be sufficient. And therefore, in order to supplement this, CSF diagnosing, especially [indiscernible] of 42, the accumulations, we believe that it should be measured in CSF. And so with the [indiscernible], both in Japan as well as in the United States, it is currently under review. And also, as Mr. Kohtani mentioned LDT, laboratory development test, as such it is bringing supplies. So it is not reimbursed, but the level of antibodies -- or the Mayo clinic and together with them, LDT testing that we would like to really offer as a sponsored program. And as for the CSF testing, the phosphorylated-tau testing needs to be done. So for the AD in Japan, the phosphorylated-tau measurement is being reimbursed. For us, it is not covered in the United States. But currently, like [indiscernible] for the phosphorylated-tau and beta that they are trying to collect this -- the ratio and they are getting the reimbursement. And therefore, with regard to the measurement of CSF, I'm sure that there's going to be a significant advancement. And as for the blood testing, Shimizu has come back over this testing method. And this is going to supplement the PET testing, and it is being approved in Japan and in the United States. LDT -- as a part of the LDT, it is already made available. And of course, it is not covered by the health insurance and also with [ SMIC ], and the simpler and less invasive blood testing that we would like to offer. And so at this point in time, of course, whether this can be offered as a full access, it is further uncertain but Cognigram's cognitive testing or CSF testing and PET and MRI, so by combining them in a systemic way, we think that we can improve on the access and we can reduce the burden for the patients.

[Interpreted] If I may ask a follow-up question, Kimura-san. Now blood testing will come later, but currently available PET on CSF. I think most testing will be derived from CSF. Well, even with the -- now for the 1 million to 2 million target patients, as mentioned by Biogen, do you think that the available testing will be enough? And when it comes to the blood testing, do you think it will be add on?

[Interpreted] Yes, that's correct. The academic societies as well. Through a combination of such available testing, how access to this drug can be expanded? That is what we -- being considered. So rather than the number of units available, the combination will be more important.

[Interpreted] This is the last question. When it comes to value-based pricing, could you please explain further?

[Interpreted] I think for the CHF, the HF treatment [ Syngraft ] of Novartis, it is known but the effect is low and then the price should be low. And then what is the measurement of the effect or benefits? In order to verify the clinical benefits, there are 2 viewpoints. One is to have very conservative, severe one, faster progressor, advisory committee, CDRS and reach a deterioration of over 8 points. And then for such patients, there will be no impact, significant impact, but ADNI and as the historical data on the patients and 6 months CDR-SB deteriorated by 0.45% and over 1% worsening. And then for most of patients, the value will be covered by value-based contracts. And so based on our model, how big the target patient who we cover by this target, the value-based contracts. AD franchise, Mr. Shimizu, in charge of AD franchise, is going to respond to you.

[Interpreted] Can you hear? This is Shimizu speaking.

[Interpreted] Yes, I can hear you.

[Interpreted] Thank you for your question, Mr. Kohtani. It's a very good point. Currently, we are working with Cigna as a main potential partner for value-based contracts, of course, there are many things that cannot be mentioned in writing. However, for example, when administration, it started, of course, the titration will be the starting dose. And if there are any interruption of the drug because of the AE, and then the value -- expected value is not to be returned to the patients, therefore, the related costs shall be returned. So inclusive of that, various scenarios are being considered. After contract is concluded, we would like to update you.

[Interpreted] Not only ADR, but also benefits or effect of the drug shall be considered as well, right?

[Interpreted] Well, regarding that point, it is being considered. Therefore, we are not in a position to respond to that specific question now.

[Interpreted] From Citigroup Securities, Mr. Yamaguchi, please.

[Interpreted] I hope you can hear. I have 2 questions. The first question, I understand at this time it was an accelerated approval. So you have to carry out additional clinical trial. So as to the schedule of this clinical trial to come, please give us further information on this.

[Interpreted] Thank you very much for your questions. So with regard to the question, Ivan Cheung, Neurology business President, is going to respond. Ivan, please.

Thank you very much, Yamaguchi-san, for this question. The FDA just posted the approval letter on the website. So you can see the approval letter. And in the approval letter is specified that to verify the clinical benefit of aducanumab, a randomized controlled trial to evaluate the efficacy of aducanumab compared to an appropriate control for a treatment of Alzheimer's disease will be conducted. And with regard to the schedule, based on the agreement with the FDA written in the approval letter, the final protocol will need to be submitted to the FDA next year in August. And the trial completion needs to be done by 2029 and the final report needs to be submitted to the FDA by 2030.

[Interpreted] May I ask a second question?

[Interpreted] Yes, please.

[Interpreted] This is about the future, but BAN2401, which will come later, and could you please elaborate on this as well? First one is biomarkers were the basis for the approval of aducanumab. And then similar approach may be taken for BAN2401. Do you think that it will be possible to obtain approval for that as well? But with the approval of aducanumab and 2401 aducanumab, how are you going to have differentiated these 2 drugs in the market? Could you please explain on these 2 points?

[Interpreted] I would like to invite Ivan Cheung to respond to your question.

Thank you very much for the question. Very good question. Firstly, for the first part to your question, on BAN2401, as you know, the Phase III Clarity AD trial for early AD, very similar population to the ADUHELM Phase III program, that trial completed enrollment back in March of this year. We expect readout of the trial in the second quarter of next fiscal year, fiscal year 2022. And we expect a very expedited process discussion with the FDA on those data. So at this moment, we are very focused on completing and executing the Clarity AD trial with the highest quality of data, a fully, fully powered Phase III trial to enable our single pivotal trial strategy for BAN2401 aiming to secure a full approval based on Clarity AD. So that is our BAN2401 strategy. And with regard to the second part of your question on the differentiation of the 2, of course, you know very well both antibodies target the aggregated form -- of the aggregated toxic form of amyloid beta, although the binding is a bit different between the 2, as you heard from CEO Naito earlier, of course, BAN2401 has preferential binding to protofibril. So we do expect the profile in terms of efficacy, safety will be -- we will see some differences as any 2 antibodies in any class of therapy that would be expected. And based on the data, I think Eisai and Biogen will be very glad to have 2 therapies to address a rather heterogeneous population. And again, not only clinical endpoints, but the biomarker profile of the 2 therapies down the road as we see the data will also play a very important role. We believe having 2 will be very critical for Eisai and Biogen to be in the leadership position in this space for many years to come.

[Interpreted] The next question comes from the Nippon (sic) [ Nihon ] Keizai newspaper, Mr. Yamada.

[Interpreted] If I may, I'd like to start. So first of all, I would like to say congratulations. So I understand that you received accelerated approval in the United States. But in the past, for the other products, those who have received accelerated approval. But again, there are some cases we switch the approval have been rather difficult to come by in other markets, including European markets. So how much are you certain about the approval to come in other regions?

[Interpreted] So with regard to the question, Ivan Cheung is going to respond.

Thank you for the question. We are in active dialogue with the PMDA in Japan and the EMA in Europe and a few other regulatory agencies that we have filed aducanumab. And you are correct, different countries does have somewhat different regulatory pathways to approve drugs, whether we are talking about Japan or in the European Union. One thing -- I would say 2 things. One, of course, is we stand behind the data package for aducanumab, irrespective of which regulatory agency we are talking with. Number two is it is true that it's been almost 2 decades for a new novel therapy for Alzheimer's disease, and that's true not only in the United States, it's true everywhere else in the world. The unmet medical need is enormous. So with these 2 points in mind, we will work very, very hard, along with our partner, Biogen, in every single country that we have filed aducanumab to find a way to bring ADUHELM to patients in those countries.

[Interpreted] The next person is from Crédit Suisse Securities, Mr. Sakai.

[Interpreted] Value-based medicine, this concept has been explained by Mr. Naito at the time of the information meeting as well, $56,000. That means about JPY 6 million per year annual cost. And what are the pre-assumptions? Up until 2025, you said that you will not increase the price for this drug. And this drug, how long this drug should be administered? What is the preconditions, assumptions for coming up with this cost? And up until '29, may not be related to value base, but the Phase IV shall be conducted until '29. So considering all these costs, as per materials provided by Biogen, in the presentation, targeted patient, this term was used, 1 million to 2 million people, patients are going to be targeted. So all these have been taken into account to come up with a value-based approach as the global value? Or is it only related to the values considered in the United States?

[Interpreted] Thank you very much, Mr. Sakai. This is Naito speaking. In the modern pharmaceutical industry, as in the case of oncology area. But when it comes to the pricing for drugs, not based on costs, but rather the values which are expected to be brought about by the drug upon which value should be evaluated and price should be considered. And that is the mainstream. And I believe that, that is the concept that is well received by the society at large. And assumptions, including various models like [ Malkoff ] model, there are various calculation models, mathematical models such as quality, concept of quality has been introduced. And for evaluation of costs are duly conducted. And after considering all these factors, we came up with this -- they came up with this number. And I would like to refrain from explaining specifics about the formula for calculation. But what is widely recognized or authorized in the society has been used as a methodology. The equation for calculation has been selected to come up with this threshold within which price was calculated. I think that is what I can say.

[Interpreted] Understood. Getting approval on this drug, I think that you have a kind of a spell of mission. So I hope that you will do your best in order to deliver to what has been promised.

[Interpreted] Next question comes from [ Mr. Yonezawa ] of Yomiuri Newspaper.

[Interpreted] I hope you can hear me. I'm Yonezawa from Yomiuri Newspaper. So this is my question to Mr. Naito. So as for this contribution of this drug to your bottom line, from when do you think that you can achieve the contributions to your profitabilities? And how do you view the possibility of this becoming the blockbuster?

[Interpreted] Thank you very much, Mr. Yonezawa. This is Naito speaking. So with regard to this drug, as I have been trying to discuss, again, this is really the drug that will require the A beta confirmation to confirm the aggregation of A beta. So as we discussed, we need a PET and the CFS (sic) [ CSF ] kind of the testing and by overcoming this process that we can find the eligible patients. So in a way, this is not really another common drug, but this is truly a specialty drug. That's how this product is recognized. And therefore, as Biogen says, in the United States, you're talking about 1 million to 2 million of patients. And also in Japan, probably it should be around 1 million of the patients that would become target initially for this treatment. And of those potential, the patients [indiscernible], confirmation would need to be done for this PET or the CSF testing and so we need to really come up with a good forecast as to the proportion of the patients who will become eligible. And so for the first round of patients who will be placed under this treatment, I do not really expect any large kind of sales revenues or profitability coming from such a first round of patients, but as we have better infrastructures for testing. And also as was mentioned today, if blood testing can be used for the confirmation of A beta plaque and then that should certainly make it possible for far larger patients becoming eligible for this treatment. And it is really at that point in time that this may really be able to unleash the potential that it has to make the significant contributions to our bottom line.

[Interpreted] Well, it is exactly the time to end today's meeting. So we would like to end today's meeting. I would like to close today's conference call. Thank you very much for taking time out of your busy schedule to take part in this meeting. I hope you will continue to support us. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]