Eisai Co., Ltd. ($4523)

[Interpreted] It is now time. We would like to begin Investor Day corporate strategy. This is held in hybrid format, including in-person attendance and virtual attendance. Those of you who are attending in person, we have distributed presentation materials. For those of you who are participating online, please find materials on our website. Today, there will be simultaneous interpretation between Japanese and English. Those of you who are attending virtually and also in person, please select the language of your preference. Let me introduce the presenters. Mr. Keisuke Naito, COO and Chief Growth Officer; Dr. Katsutoshi Ido, Chief Scientific Officer; Mr. Takuya Oyama, Chief Financial Officer and Chief IR Officer. First, COO, Mr. Naito will discuss long-term vision in the 3-year plan, which is based on the long-term vision, which will be followed by presentation by Dr. Ido, Chief Scientific Officer, to discuss drug discovery R&D that supports long-term growth. And then Mr. Oyama, Chief Financial Officer, will discuss business growth and value creation, which are supported by new financial policy. And at the end, Mr. Naito, COO, will summarize the 3-year plan. Mr. Naito, COO, please.

[Interpreted] Hello, everyone. I am Keisuke Naito, COO for Eisai. Today, -- thank you very much for gathering to participate in this Investor Day on corporate strategy of Eisai Company Limited. Today, I would like to talk about the long-term vision based upon how this company is supposed to spend under this long-term vision for the coming 3 years. Next slide, please. First of all, we, at Eisai -- how Eisai has advanced the drug discovery in the field of Alzheimer's disease and how our understanding of AD has evolved. This is what I would like to explain using this slide. By advancing our drug discovery from Aricept to LEQEMBI, we have pioneered an era of addressing dementia through medical care and have further moved toward an era in which AD is understood not merely a set of symptoms, but as a disease entirety -- entity defined by biomarkers. In the 1960s, dementia was not well understood, and the patients were treated as misunderstood and isolated individuals. Descriptions of this harsh reality can still be found in books from that era. Later in the 1980s, the acetylcholine hypothesis was proposed. And in 1983, we began our drug discovery efforts. Then in 1996, Aricept was approved in the United States. Aricept was a major step forward in pioneering an era where dementia is addressed through medical care. Against the backdrop of these medical advances, society's understanding of dementia also evolved. And in 2004, the term was changed from senility to dementia. At the same time, the challenge of addressing the underlying pathology of AD was extremely difficult. In 1992, the amyloid beta hypothesis was proposed, and the drug discovery for AD disease-modifying therapies began. However, since then, 117 development projects have failed worldwide with a cumulative total of $42.5 billion invested in research and development. Despite this, Eisai did not give up on the challenge. And in 2023, LEQEMBI was approved. This marks a major step towards an era where we can address the underlying pathology of dementia. Also, in 2023, the basic act on dementia was enacted, advancing efforts to realize an inclusive society where people with dementia can live with hope. From Aricept to LEQEMBI, through the evolution of drug discovery, Eisai has pioneered an era of addressing dementia through medicine, and has further advanced toward an era where AD is understood, not merely as a set of symptoms, but as a pathophysiology defined by biomarkers. We will continue to contribute to the evolution of medical care for dementia. Next, please. Now our next goal is to achieve the -- I have mentioned that AD is now regarded as a set of biomarkers to define the disease and ATN, now this ATN is regarded as a very important in viewing the disease dementia as a set of biomarkers describing it. Now in AD, we believe that it is a pathological condition that progress continuously even before symptoms manifests. And it is crucial to be view AD not as a disease that is recognized only after symptoms appear. In amyloid AD, amyloid beta first accumulates abnormally in the brain forming senile plaques. This appears quite early in the pathological progression of AD and it's considered an upstream event up from a downstream tau pathology and neurotoxicity. Biomarkers such as amyloid beta 42/40 and p-tau 217 are crucial for detecting this amyloid beta pathology. Next is to tau pathology. Tau is a protein that normally stabilizes microtubules. But in AD, it undergoes abnormal phosphorylation within neurons and accumulates as neurofibrillary tangles. It is believed that the spread of tau pathology correlates more strongly with cognitive decline and symptom progression than amyloid beta itself. Here, biomarkers such as p-tau 205 and eMTBR tau 243 serve as clues for assessing tau pathology. Further downstream, neurodegeneration progresses, leading to synaptic dysfunction, neuronal injury and brain atrophy. This is the pathological process most directly linked to cognitive decline. NfL and neurogranin are biomarkers used to assess such neurodegeneration and synaptic dysfunction. Thus, our treatment strategy is based on the premise of viewing AD as a continuum of amyloid beta pathology, tau pathology and neurodegeneration and monitoring each of these stages using biomarkers. Next, please. The brain health panel, the data bank, based upon the data captured through trials and relationship with the patient so far, and by utilizing BHP, we aim to capture the pathophysiology of dementia earlier and more objectively through liquid biomarkers. As I said, we assess amyloid beta of authority using Abeta 42/40 and p-tau 217, tau pathology using p-tau 205 and eMTBR tau 243 and neurodegeneration and synaptic dysfunction using NfL and neurogranin. Building on this, we are advancing ATN, amyloid beta tau and neurodegeneration as a treatment strategy targeting these. At the core of this strategy is LEQEMBI, an anti-amyloid beta antibody in a preclinical study stage of AD before symptoms appear. It aims to prevent the accumulation of amyloid beta and ultimately prevent the onset of AD. Furthermore, even in stages where amyloid beta has already accumulated, it aims to slow disease progression by removing the pathology. Next is Etalanetug, anti-tau antibody. It seeks to hold the progression of the AD by inhibiting the propagation of tau pathology. Furthermore, E2511, a synaptic regeneron, aims to restore cognitive function by promoting the regeneration of synaptic function through TrkA stimulation. In this way, BHP visualizes the pathological mechanisms of AD and through LEQEMBI and Etalanetug and E2511, we intervene in stages targeting Abeta, tau and neurodegeneration. Under this treatment strategy, we will continue to strive to realize make AD acurable disease. Next, please. This challenge to address the AD continuum is at the core of our long-term vision. Eisai will integrate biomarkers, data, technology and ecosystem centered on the drug discovery technologies we have cultivated to date. Through this, we aim to detect the diseases earlier and control them more precisely. In AD, starting with LEQEMBI, we will strive to detect the disease before symptoms appear, slow its progression and ultimately move towards making it a treatable condition. In oncology, we are committed to reducing patients' anxiety and recurrence and expanding the possibilities of a cure because anxiety about recurrence has continued to be a concern for anxiety for patients for many years. Furthermore, through the control of neurological conditions that end up being brain health, we will contribute not only to treating the disease itself, but also to improving the quality of life and the time people can spend living as their true selves. Our goal is to reduce the time taken away by illness and expand the time each individual can spend leaving their own lives. This is our long-term vision and the underlying philosophy for the 3-year plan we will explain now. Next, please. So in order to realize this long-term vision of how we are going to spend fiscal years 2026 through 2028. You can see the simple summarization. So as I said earlier, long-term vision. For example, make AD a curable disease. E2511 will be developed to take time and costs. So with this, now sustainable growth of the company is going to be very crucial for us over the coming 3 years. Building on the growth of LEQEMBI, we will continue to invest in our priority pipeline while strengthening our management base under new financial policy. Specifically, first, business growth, product development, and third, strengthening our management base. These are the main pillars of our plan under this 3-year plan, creating a base for sustainable growth. On the business front, we will focus on organic growth centered on our [ 3L ] products, LEQEMBI, LENVIMA and DAYVIGO. In product development, we will work to strengthen our pipelines in the neurology and oncology field in drug discovery as well as expand our nondrug discovery efforts. Regarding our management base, we will improve profitability and capital efficiency by enhancing cost competitiveness, strengthening headquarters functions and introducing new financial policy. For fiscal year 2028, we are targeting revenue of JPY 1 trillion and a core operating profit of JPY 90 billion. Starting in fiscal year 2029 and onward, we will drive growth through the next-generation products following LEQEMBI, LENVIMA as well as the expansion of our pipeline. Next, please. So it is very important for us to review what was last year's performance. FY 2025, if you look at the top left, this is what we presented at the 2004 information meeting. Here, there are various milestones as an assumption for the business milestones and how these milestones have progressed are shown here. This is a very busy slide, so let me summarize. Overall, the strengthening the -- we made a significant progress in strengthening our growth foundation and advancing structural transformation. The 3 products, led by LEQEMBI, drove growth, and accelerate the shift to an organic revenue model that does not rely on onetime income. At the same time, we implemented structural reforms focused on SG&A expenses, internalized and standardized core IT operations through the establishment of GCC, global capability center, and pursued a disciplined balance sheet management. We also achieved several key milestones in our business. LEQEMBI grew steadily across all regions, achieving full year revenue approximately double that of the previous fiscal year. Additionally, we announced efficacy and safety data up to 48 months, obtained U.S. approval of and launched IQLIK for maintenance treatment, filed applications for initiation treatment in the U.S., Japan and China, and there was advancement in the diagnostic environment using blood-based biomarkers. Regarding LENVIMA, we grew and maintained sales across all regions, exceeding our full year forecast for fiscal 2025. In the U.S., we achieved revenue growth while absorbing the impact of the IRA. Looking ahead, we anticipate adding a new indication of second-line treatment for renal cell carcinoma based on the LITESPARK-11 study. In our pipeline, Phase III trials for lecanemab and Etalanetug are progressing smoothly, and we achieved LPI in the Phase II study of Etalanetug for sporadic Alzheimer's disease. We also have -- we have also initiated a Phase II study for Ledasorexton. In oncology, we have strengthened our pipeline through the in-licensing of 2 products. Next. Here, we will discuss our long-term vision, as I have already explained. But regarding the 3-year plan, that is positioned or designed to put this long-term vision into action. We will prioritize enhancing our execution capabilities to achieve the long-term vision, managing the businesses flexibly based on multiple scenarios and ensuring highly transparent financial management and progress monitoring. Furthermore, given the significant changes in the business environment, we will not view the plan as fixed, but we'll update and roll forward annually in an optimal flexible manner, taking into account changes in the external environment. The main point that I'd like to share with you is for the 3-year plan covering 2026 through FY 2028, how we are going to spend 3 years. And regarding this plan, this is expected to be rolled forward and we update it every year. Next, please. As I mentioned earlier, out of the 3 main pillars, I would like to explain one after another. Regarding the business growth. We will position the 3-year progress, LEQEMBI, LENVIMA, and DAYVIGO as the core of our growth and achieve a steady revenue expansion from our existing businesses. In FY '25, revenue was JPY 825.4 billion, and core operating profit was JPY 50.1 billion. We aim for JPY 1 trillion level in revenue and JPY 90 billion in core operating profit in FY 2028 through the growth of the 3L products. What we believe is important is the quality of profit growth. We aim to increase our core operating profit significantly. This organic growth not relating -- depending on the onetime growth or income. And furthermore, the share of 3L products in total revenue is expected to rise from about 60% in FY '25 to approximately 70% in FY 2028. By maximizing the value of these 3L products, we will achieve both top line growth and improve the profitability, thereby strengthening the foundation for sustainable growth. From now on, I would explain the growth outlook for each of the 3L products and the business milestones that support them. First, I will discuss LEQEMBI, which serves as the starting point for growth. LEQEMBI is an anti-amyloid beta antibody eligible for long-term treatment. It shows the progression of AD -- slows the progression of AD by removing amyloid beta protofibrils and amyloid plaques, which have been reported to be neurotoxic and slows the decline in cognitive and daily functioning. Revenue for fiscal year 2025 was JPY 88 billion. By fiscal year 2028, we expect that the prescribing physician base is expected to expand through the broader use of SC-AI BBM for confirmatory diagnosis and the accumulation of real-world evidence. As a result, we expect to establish a position as the standard of care in the AAT anti-amyloid therapy market and project sales of JPY 300 billion level. As a business milestone for SC-AI, we expect it will be used for initiation treatment in at home and care facility settings across many regions, advancing the home administration environment. Additionally, we aim for it to be listed in the formularies with the majority of insurance companies on the medical party in the U.S. In terms of diagnosis and treatment pathways, we will promote the adoption of confirmatory diagnosis using BBM for amyloid beta testing with insurance reimbursement in major countries. Through DTC OMS activities, advancement in digital cognitive assessment and a confirmatory diagnosis using BBM, diagnosis in primary care setting will be expanded. And by standardizing MCI treatment, earlier consultation and referral will be facilitated. Furthermore, we expect to obtain top line results from a AHEAD 3-45 study targeting preclinical AD to confirm the value of earlier treatment intervention. Next, DAYVIGO. DAYVIGO is an orexin receptor antagonist that developed from our in-house drug discovery platform targeting the orexin pathway, which is involved in regulating sleep and wakefulness. Revenue for fiscal year 2025 was JPY 64.3 billion. We aim to establish it as a blockbuster product, generating JPY 100 billion level revenue by fiscal year 2028. As the block -- as the product. To achieve this, we will maintain our position as the leading brand in the insomnia treatment market in Japan. In the Americas, including Canada, we will drive growth through commercial strategy centered on digital initiatives. In China, we anticipate a significant expansion in sales volume, following the inclusion in the NRDL National Reimbursement Drug List. In addition, we will expand into new markets such as Europe, South Korea and Brazil, broadening our growth drivers overseas in addition to Japan. Finally, LENVIMA. LENVIMA is an in-house developed overall multi-kinase inhibitor with 7 indications in 5 cancer types. We have expanded patient contribution with monotherapy and combination therapies with KEYTRUDA. Revenue in fiscal 2025 was JPY 342.5 billion. In fiscal 2028, even after taking into account LOE in various countries and impact from health care policies, we aim to achieve JPY 250 billion level of revenue. There are 2 factors behind maintaining growth. The first is potential additional indications in ARCC based on LITESPARK-011 study. And secondly, favorable court decisions and settlement agreements related to high purity compound patent in the U.S. Generic versions of LENVIMA are not expected to launch in the U.S. until at least July 1, 2030, unless certain other conditions occur. On the other hand, in the U.S., the impact of IRA price reduction in the U.S. is factored in. In multiple countries across Europe and Asia, sales share is expected to decline due to LOE. After taking these impacts into account, we will continue to maximize the value of LENVIMA. Next, the second pillar, product development, in particular, strengthening of R&D pipeline, leveraging human biology, integrating data and AI, we have developed a common platform. Using that advantage, we will achieve both increased success probability in drug discovery and faster development speed. With that, we will strengthen R&D platform supporting sustainable growth. We will steadily build regulatory approval submission, clinical introduction by fiscal 2028 by redeveloping pipeline to strengthen growth foundation. In particular, neurology and oncology are strategic areas, and we will leverage the strength of both advance development. Especially in neurology, we will develop a next generation -- we will pursue a next-generation drug discovery, in additional indication of LEQEMBI and -- by utilizing abnormal protein and orexin knowledge. In oncology, LENVIMA value will be maximized and in-licensing development will be promoted to enhance pipeline. We will also strengthen external collaboration and exploratory work. We will also achieve improved success probability and drug discovery and enhance pipeline by utilizing AI and data foundation. It is also important to achieve growth investment and improved efficiency through partnering. And by optimizing development capability and resource allocation, necessary investment will be made and cost will be appropriately controlled to improve productivity in R&D. In the nonpharmacological R&D, nondrug R&D, in each area, there are different anxieties. In cognitive area, in each stage of health -- in healthy state at high risk after incidents treatment, nursing care and prognosis, we are focused on these anxieties that cannot be eliminated simply with pharmacology. And these anxieties that cannot be eliminated with the drug will be confronted in our 3-year plan. And across health care, nursing care and daily living, ecosystem will be built as a platform. And we will also promote elderly welfare domain to expand value in nursing care and home care. In ecosystem platform, cognitive function check, treatment support, data cooperation will be utilized to assist early noticing of changes, consultation, access of care and treatment. And in doing so, we will develop environment where there will be timely, easy access to medical care for people who need such care. In elderly welfare domain, we will increase touch points with care facilities in home and accumulate daily living information to improve quality of care and improve operational efficiency due to changes in the daily life early on. To facilitate access to medical care, we will utilize these data and touch points to visualize a [ quantitive ] disease and achieve the tailored care and drug discovery insights. In the future, it will not be limited to a cognitive dementia area, but including a [ strict ] area, personalized medicine, boosting of pharmacological businesses and a new creation of revenue will be aimed at. Next, to strengthen management of business, we will enhance our profitability through cost structure reform, namely under MTT manufacturing, quality and technology, CMC integrated strategy will be promoted to reform production structure and enhanced supply strategy. In doing so, production efficiency will be improved and structural cost reduction will be achieved, especially focusing on LEQEMBI, manufacturing process will be improved and production efficiency will be enhanced to improve cost competitiveness of antibody medicine. High-quality, stable supply cost competitiveness will be achieved at the same time to support higher earnings power and sustainable growth. Next, we will optimize our management foundation. A 3L further maximization of value will be promoted through global portfolio management structure. In the past years, in 2024, 2025, global structural reform was implemented, and leveraging that impact, we will further optimize regional organization and operational structure. Eisai Knowledge Center India has GCC IT core operation in-housing and standardization will be used, leveraging DCC to advanced company-wide operations. Financial policy is also revamped to advance capital allocation and investment decisions. Company-wide decision-making capabilities and capital efficiency will be improved. This is a busy slide, but this is the summary of overall picture. As I've mentioned at the outset, we consider in the next 3 years to be the period of solidifying foundation for long-term growth. Starting from LEQEMBI growth, we are investing in strategic pipeline and we will also pursue new financial policy. Through this, we will strengthen our management foundation to achieve sustainable growth as drug discovery company. This is the period for solidifying foundation. The uniqueness of -- and strength of Eisai includes our past development in the area of AD. And such distinctive challenges have been taken on by Eisai, and we will continue to do so by further strengthening our competitive edge over the long term. And that will be what we will be pursuing in the next 3 years. As for numerical targets in 2028, fiscal 2028, on a consolidated basis, JPY 1 trillion in revenue, JPY 90 billion in core operating profit are the targets. In organic business, for LEQEMBI, by utilizing SC formulation and BBM. For confirmatory diagnosis, we aim to solidify the position as standard of care in AAT market and aim to achieve JPY 300 billion in sales. DAYVIGO aims to achieve its position as blockbuster product to achieve JPY 100 billion revenue. Through continuous patient contribution, we aim to maintain JPY 250 billion level for LENVIMA. In next-generation pipeline LEQEMBI preclinical AD indication, Etalanetug, strong development will be accelerated so that we can aim to file submission in fiscal 2028. In E2511, brain function recovery will be aimed at and orexin platform will be utilized to normalize brain function and utilizing in-licensed assets in oncology and also MID focused in-house assets, we will enhance pipeline to support a sustainable corporate value enhancement. We will also diversify financing networks and strengthen our balance sheet management and refresh the financial policy, including rebound indicators for financial management. Next, CSO.

[Interpreted] This is Ido, CSO. I am Ido, and from here on, we will explain how we plan to build our next growth pipeline in the neurology and oncology area based on Eisai's deep understanding of human biology cultivated over many years. Our R&D team will aim at continuously generating submissions, approvals and critical launches fiscal 2028, thereby evolving and expanding our pipeline. In the neurology field, our goal is to control brain pathology and function to support brain health in the era of 100-year life span. At the core of this is make AD a curable disease. With LEQEMBI, we aim to prevent the disease onset by developing SC-AI and initiating treatment -- initial treatment at an earlier stage in preclinical AD. Furthermore, we will tackle the challenge of controlling tau. One of the 2 major pathologies alongside amyloid beta to halt disease progression. Furthermore, we will expand our drug discovery efforts to include the restoration of neurological function and accumulation of abnormal proteins such as alpha-synuclein. We're also working on the control of neurological function based on sleep and wakefulness. Building on the orexin platform established with Lemborexant, we have Ledasorexton. Ledasorexton, an orexin-2 receptor agonist. Leveraging this foundation, we will advance the creation of next-generation novel drugs. In the oncology field, we view cancer as a continuum and aim for medical care that encompasses everything, from prevention to treatment. In addition to the indications for LENVIMA, we are advancing drug discovery centered on minimal residual disease, MRD, microscopic residual region that remained at levels, undetectable by imaging after treatment. To achieve these goals, we will concentrate resources on priority areas and combine in-house drug discovery with product in-licensing and strategic partnerships. We will explain how we view AD and where we plan to intervene in order to realize make AD curable disease. The figure below illustrates the progression of AD, from left to right, amyloid beta protofibrils which form due to amyloid aggregation, trigger a tau cascade involving downstream tau aggregation. Subsequently, tau aggregates mature and MTBR tau seeds propagate throughout the brain, causing neurodegeneration and resulting in cognitive decline. We have been working to visualize this continuum. Using the brain health panel, which combines blood-based biomarkers, we aim to determine which stage of AD a patient is in and which pathological processes are active so that we can deliver the appropriate treatment at the right timing. We're intervening this AD continuum in 4 ways that you see above. Approach one involves early administration of lecanemab in preclinical AD to prevent the onset of the disease. Approach two uses lecanemab, which is currently approved, to slow disease progression. And after the onset of the disease approach two through four come. And then number three is an approach that uses the anti TBR tau antibody, Etalanetug, to suppress tau propagation and hold disease progression. And the fourth approach is four -- focuses on restoring a neural function and enhancing brain resilience. One of the assets that will realize this concept is E2511, a small molecule designed to enhance signaling through the neurotrophic factor receptor, TrkA, and reactivate damaged neural function. We view AD as a pathological cascade involving amyloid and tau visualized pathology, including neurodegeneration, and intervene based on the patient's condition. This is the path towards make AD a curable disease, transforming AD into a more treatable disease. Next, I will explain Etalanetug, the compound on which we are focusing our efforts in tau targeting drug discovery. In AD, the spread of tau pathology within the brain is strongly correlated with cognitive decline and the progression of clinical symptoms. As shown in the figure on the left, the key processes, the propagation in which tau aggregates forms neurofibrillary tangles and spreads to surrounding neurons. The key to this process is MTBR tau. The regions labeled R1 R4 in the figure on the right represents the microtubule binding region, MTBR, which serves as the core of tau aggregates and plays a critical role in the propagation of the pathology. Etalanetug is an antibody that targets pathologic, pathogenic tau seeds containing this MTBR. While tau's fragments of various lands exist outside of nerve cells, only a limited number of tau species contributed to the spread of pathology. For example, fragments from the end terminal and on the far left to the middle region are not believed to play a major role in propagation activity, and targeting them alone may not be sufficient to suppress propagation. Etalanetug, on the other hand, aims to directly suppress propagation between neurons by targeting the core that is released extracellularly and spreads tau pathology. Its key feature is that it targets the specific steps of pathological propagation without reducing total intracellular tau, thereby leaving physiologically necessary tau unaffected. As we reported last year, in a Phase Ib trial involving patients with DIAD, dominantly inherited AD, we confirm the reductions in multiple tau pathology-related biomarkers, including MTBR tau 243, which is included in Alzheimer's Association's revised criteria as well as a decrease in tau levels, thereby achieving proof of mechanism. A Phase II trial targeting sporadic AD is currently underway, and we expect to obtain top line data during fiscal year 2027. Next, I would like to turn to orexin drug discovery which focuses on wakefulness and sleep. Orexin is an important neurotransmitter that supports wakeful state. Narcolepsy has strong drowsiness because of the insufficient function of this. Ledasorexton E2086 is an agonist stimulating orexin-2 receptor. Lemborexant suppresses orexin signal to induce sleep, whereas Ledasorexton enhances -- aims to enhance wakeful signal during the day. The graph on the right shows type 1 narcolepsy patient to see how long patients were able to stay awake in a sweep conducive environment. Vertical white bar is placebo, black bar is modafinil. But against placebo and modafinil, significantly sleep latency was extended, especially in 10-milligram and 25-milligram, more than 30 minutes of wakefulness was maintained, showing strong arousal promotion effect. In once daily administration, we aim to develop this as a drug that can support wakefulness during the day. So far, hepatic function disorder or visual disorder have not been observed. For over 20 years, Eisai has developed orexin biology, achieving clinical POM for insomnia with lemborexant and narcolepsy with Ledasorexton. We will link this knowledge with brain function regulation, supporting daytime activities and neurodegeneration to lead to the next discovery of new drugs. I will now turn to modalities and technologies supporting Eisai's R&D. In this slide, I will introduce in-house developed brain penetrant shadow that will expand the possibilities of antibody drug discovery in CNS area. Through LEQEMBI, we have shown that we can intervene in the AD pathology with antibody. Going forward, we will further advance antibody drug discovery so that with smaller dose, effect will be delivered to targets in the brain more efficiently. Hence, proceeding with brain penetrant shuttle technology development and project development. The shadow antibody utilizes biological mechanism of RMT or receptor-mediated transcytosis of the living body. As shown on right in the blood vessel and at the top is blood vessel. Inside the blood vessel, they will be binding with receptor and then will be taken up in the cells and will be dissociated within [ endosop ] rapidly before released to the brain side. So efficiently antibody is shuttled. As a delivery platform of antibody drug targeting CNS, we aim to create projects. Another is a small molecule drug. Small molecule drug discovery is increasing in value once again as a result of technological innovations in recent years. Proximity inducing molecules and RNA targeted small molecules are examples of areas where new drug discovery potential is increasing. In CNS area, a long-term administration is necessary to reduce burdens on the patient's small molecule, which can be available early is quite important. And we believe that small molecule will continue to be at the core of drug discovery. Eisai has strength in small molecule drug discovery and was the first company to discover the function of molecular adhesive in [ disulam ] and has accumulated expertise in this area. After Aricept we also have experienced launching 8 in-house small molecule drugs. In addition, in CNS, we have data accumulated over many years, which led to proprietary AI and exploration of new mechanism of action to become able to target heretofore difficult to target areas. For AD orally available small molecule disease modifier, the ultimate modality realization is aimed in our research -- ongoing research. Leveraging such strengths, we aim to create new treatment value through small molecule drug discovery. The strength supporting Eisai's drug discovery includes clinical development capabilities in reverse translation capability, which uses human data obtained in clinical research to the next drug discovery. At the core of this molecular profiling. Eisai has the world's highest analytical technology that can detect case biomarkers that reflects amyloid and tau pathology in the brain. With this technology, we are able to develop eMTBR tau243, which is plasma biomarker, reflecting tau pathology in the brain, which before, was able to be measured only without tau pet. And this marker is now used in clinical research. We are also analyzing human biospecimen with mass spectrometry proteomics. The data obtained from large clinical studies are analyzed in this way to understand a molecular level effect of drugs on pathology. We are comprehensively analyzing in-house clinical study samples to realize a pharmacological value and identify targets and pathway that lead to pharmacological effect to improve success probability of next-generation drug discovery. Another is AI usage supported by in-house clinical trial to support clinical development capabilities and algorithm that is clinically applied to predict blood biomarker in AD pathology. Etalanetug targets tau. And in the clinical trials, positive tau pathology patients have to be enrolled. Tau PET was necessary, which was time consuming and costly. So LEQEMBI clinical trial data was utilized to predict in-brain amyloid PET based on blood biomarker p-tau 217. And tau PET positive, tau propagating stage patients are screened with our proprietary algorithm, which is now used in Etalanetug study. molecular profiling and AI are used for high-precision patients electional setting and progression prediction to eliminate waste and conduct design of the study in efficient way, which is our strength. Turning to oncology. In oncology, as next-generation drug discovery, we are targeting MRD or minimal residual disease. We decided to focus our efforts on this area. So I would like to introduce that. As shown in the diagram at the bottom, at the time of the diagnosis, deductible volume of cancer cells exist in the body. After surgery and pharmacological therapy, cancer cells will be diminished greatly, but the complete elimination is not achieved. In a level not detectable in imaging testing, miniscule volume of cancer cells remain, which is MRD. This proliferates and will become clinically detectable recurrence and metastasis. MRD will inhibit cure in early-stage cancer. And after metastasis, it will lead to faster progression of the disease, hence, very important biology. Eisai is looking at this MRD biology, which became understandable through long-term treatment data of LENVIMA. And we would like to elucidate why MRD survives and how it acquires treatment resistance to identify target and hypothesis. ctDNA and other biomarker analysis, in-house clinical data, human biology will be utilized to develop treatment hypothesis targeting MRD. In addition to in-house research, in licensing core research -- joint research will be utilized to enhance next-generation MRD pipeline. This slide shows the progression of stage of major pipeline projects from fiscal '26 to fiscal '28. White box shows the current status and colored boxes are status that we aim to achieve in fiscal '28. In neurology, towards make AD curable, at the -- at each stage of AD continuum, there will be interventions in this multi-layered pipeline in amyloid. We aim to achieve top line in LEQEMBI preclinical AD and new amyloid projects should be in Phase I for small molecule and brain penetrant antibody. In tau, Etalanetug, DIAD 2 Phase II/III study on DIAD, top line results are aimed to be obtained in sporadic AD. We also aim to steadily progress Phase III in neurodegeneration. E2511 is to be advanced to Phase II to make concrete development in the approach of new role function recovery. In orexin targeting regulatory submission of Ledasorexton through a new and also through new projects, we would like to expand our efforts to neural state regulation, not only sleep and wakefulness, but daytime functions. In oncology, Taletrectinib and Serplulimab approval are included in our targets. In addition to clinical team promotion, focusing on MRD biology, we would like to start in-house project in the clinical stage and through structural partnering, develop next-generation pipeline. This is my final slide. In the next 3 years, starting with Eisai human biology, we will develop next-generation pipeline and grow them to sustainable growth drivers. For that in-house clinical data molecular profiling and drug discovery, clinical development capabilities, modality creation capabilities cultivated in oncology and neurology area will be brought to bear. And we will thoroughly achieve regulatory submission approval and clinical introduction to lead to growth beyond 2028 and fiscal 2028. New financial policies will be presented by Mr. Oyama.

[Interpreted] Myself, I, as a CFO, Oyama, is going to explain the financial section. First, on this page, I will explain our consolidated profit and loss targets for fiscal year 2028. In fiscal year 2028, driven by the growth of the 3L products centered on LEQEMBI, we aim to achieve record high revenue of JPY 1 trillion. We project the cost of sales at JPY 300 billion and cost of sales ratio to revenue of 30%. Although the cost ratio is expected to rise due to changes in the product mix, we will mitigate the increase through cost reduction measures centered on LEQEMBI. We project R&D expenses at JPY 170 billion. While actively investing in next-generation priority development products, we will control overall expenses in the high teen percentage range through cost optimization. We expect SG&A expenses to be JPY 440 billion. Although these expenses will fluctuate due to the profit sharing for LENVIMA and LEQEMBI, we will control them at a level comparable to fiscal 2026 by transitioning to a more efficient cost structure through structural reforms carried out primarily in Europe and the U.S. in fiscal '24 and '25. Our FY 2028 targets do not include onetime gains. We aim for both operating profit and core operating profit to reach JPY 90 billion, targeting sustainable growth through our organic business and the establishment of profit base for the future. As for capital efficiency metrics, we estimate an adjusted ROIC of 9% based on net debt of JPY 100 billion. While we will utilize that for growth investments, we will control it within the target range. Next. From now on, I will explain our new financial policy, which was partially introduced at our recent earnings call. The diagram illustrates the concept behind the new financial policy. As a general principle, we will use operating cash flow to fund our own R&D, cash, capital expenditures and shareholder returns, while allocating financial cash flow to investments in product in-licensing and M&A. We will use financing to support our growth strategy and enhance corporate value. Next. On this page, I will first explain how we are diversifying financing sources. While the company has historically relied primarily on bank loans for funding, we are now promoting the diversification of funding sources to finance investments in in-licensed products and other initiatives aimed at further business growth. As part of this effort, we plan to issue domestic trade bonds. In preparation for our first bond issuance in 18 years since 2008, we have filed a shelf registration and made an announcement regarding the bond offering. We plan to offer bonds with maturities of 5, 7 and 10 years for a total issuance amount of JPY 50 billion, with pricing expected to be finalized early June at earliest. We are also considering multiple options, including senior and subordinated plants denominated in yen and foreign currencies. Going forward, we will continue to secure investment funds in a stable and flexible manner through diverse financing methods in response to market conditions and investment opportunities. This page explains the redesign of our performance indicators. Regarding core operating profit. While we have previously referred to profit from organic business as representing ordinary profitability, we have not clearly defined this term or disclosed the specific figures. Therefore, we have decided to define core operating profit as an indicator of ordinary profitability and to disclose it. We will exclude 5 temporary income under expense items, not directly attributable to future earnings from operating profit. In addition, with the introduction of core operating profit, we are also reviewing our capital efficiency metrics. While we have previously disclosed the target ROE, we are introducing adjusted ROIC as a metric more closely linked to medium- to long-term corporate value, and we'll use alongside ROE to monitor medium- to long-term capital efficiency. Adjusted ROIC is calculated using after-tax operating profit, excluding the impact of foreign currency translation adjustments, which are not directly linked to operating activities and adding net interest-bearing debt. Since the translation adjustments account for about 30% of our equity, which was impairing the comparability of ROE, we excluded from the calculation of adjusted ROIC. For fiscal 2028, we aim for core operating profit of JPY 90 billion and target an adjusted ROIC of 9%, assuming net debt of JPY 100 billion. Turning to strengthening of balance sheet management. While utilizing debt, financial soundness will be maintained. Through 3 measures and actions, we aim to enhance capital efficiency. First, global cash management system will be made use of even more to improve efficiency of the funds and eliminate the concentration of funds via dividends and others. Second, is improvement in cash conversion cycle of Eisai. This has become prolonged, mainly due to LEQEMBI. Inventory level optimization will be promoted to shorten the cycle. Third is compression of translation adjustment. Foreign currency translation adjustment has become large, and accounts for more than 30% of equity capital. Using measures such as net investment hedges, we will curb increase and promote reductions. Financial soundness KPI targets are within 0.3 net DER and within 3x net debt to EBITDA based on the assumption that debt will be used for growth investments. Regarding capital efficiency, through the measures and actions I mentioned earlier, we target 8% ROE and adjusted ROIC of 8% to 10% in the mid- to long term to optimize capital efficiency. This slide describes capital allocation for 3 years from fiscal 2026. In terms of capital allocation funds, our plan is JPY 800 billion level of operating cash flow before R&D expenses, JPY 80 billion level of net cash and JPY 300 billion plus level of debt capacity, assuming the issuance of senior bonds. As for debt capacity, in addition to straight bonds, we are planning to issue in Japan, hybrid bonds are considered for the use in case of large-scale M&A. Based on this funding, JPY 500 billion in in-house R&D and JPY 500 billion in pipeline enhancement or a total of JPY 1 trillion investment is planned. No specific project is allocated for M&A. But if there are high-quality deals that will contribute to the growth of Eisai, we will proactively consider executing M&A. In regard to shareholder return, consolidated performance, payout ratio and free cash flow will be taken into account comprehensively to pay out dividends sustainably and stably. This is the summary of my part. To drive sustainable corporate value enhancement, we will strongly support the R&D and business growth strategies with the new financial policy. At the end, Mr. Naito, COO, will summarize the presentation.

[Interpreted] This is the final summary. Eisai positions for 3 years starting from fiscal 2026 as a phase to accelerate its transformation into a sustainable growing company. As noted in the articles of corporation, supporting the lives of the people, that long-term vision remains unchanged. In order to realize this over a long term, sustainable growth must be achieved. And as a major part of that, we have to ensure business growth. SC-AI, BBM, RWE will be leveraged. Starting with LEQEMBI, we will establish its position as the standard treatment in the AAT market and drive organic growth together with DAYVIGO and LENVIMA. By fiscal 2028, we aim to achieve consolidated revenue of JPY 1 trillion and core operating profit of JPY 90 billion. In drug discovery R&D, we will focus on key pillars, including the AD continuum, Abeta tau, restoration of brain function, orexin and MRG continuously generating regulatory filings, approvals and clinical implementations and nurturing the next-generation pipeline into future growth drivers. Together with nondrug discovery R&D, we will alleviate people's anxiety and maximize the corporate value, which is a very important area of the -- of our efforts. Under the new financial policy, we will balance growth investments and capital efficiency through diversification of funding methods, balance sheet management and the redesign of management control indicators. Over this 3-year period, Eisai will further evolve as a drug discovery company with distinctive strength transforming into an organization that captures diseases earlier, controls them more effectively and reduces the time people may lose due to illness. That concludes our presentation. Thank you very much for your kind attention.

[Interpreted] [Operator Instructions] Those in the venue, could you please raise your hand if you have any questions?

[Interpreted] My name is Hashiguchi, I'm from Daiwa Securities. Regarding cash allocation to enhance, strengthen pipeline, JPY 500 billion level will be spent over the coming 3 years. In specific area or field, are you going to put focus on in order to explore the opportunities for investment, could you please elaborate on this? Neurology and oncology, respectively, what is going to be the split between the 2 areas? From early to late stages or what can be immediately sold? And maybe different opportunities are sought after in neurology and oncology, but could you please give us your broad take on how the investment is going to be split?

[Interpreted] Thank you very much for your question. How are we going to invest? We have forecast priority areas, as I said earlier, the neurology and oncology. This remains unchanged. On the other hand, as you said, how are we going to allocate investments is going to be changed a little bit, particularly in AD area, which is the area where we have specialty. From Dr. Ido who explained, we have a very robust technology capabilities in-house. On the other hand, as regards to oncology, we needed to take on the challenge to prevent the metastasis and the recurrence utilizing the capabilities. But however, as you can see, the opportunities in the later stage and development pipeline, we would like to also continue to invest. We continue to make a significant contribution in the oncology area, which we believe is very important. Therefore, we needed to continue investment in order to make it sustainable. On the other hand, for enhancing the pipeline and M&A, these are separated advocacy. As you see in the wealth -- the investment to enhance the pipeline, what can be sold now or close to be launched? What is available now for sale or the things in the phase close to the business realization, I think that this is the type of investment we can consider when it comes to enhancing the pipeline. But as we mentioned earlier, orexin platform, we have drug discovery platform, which needs to be enhanced through the approaches, including the opportunities of M&A. So we would like to be -- stay alert on exploring those. Are there any comments from Dr. Ido or Mr. Oyama?

[Interpreted] Thank you very much for your question. As has been mentioned, we are focusing on the neurology and oncology areas. And regarding this first for oncology, which will continue to be our focus area. And later-stage development or assets close to be approved, yes, these are the focus areas. And R&D before POC asset also included in consideration in order to enhance the solid pipeline. We will follow-up on those assets as well. And M&A is also clearly one of the options, particularly the exploratory research platform is also considered to be very important going forward.

[Interpreted] Next question, please.

[Interpreted] This is Wakao from JPMorgan. Fiscal '28 plan, revenue, JPY 1 trillion, and JPY 90 billion of core operating profit. I have a question on this. In this just described 3-year plan, is that you will be reviewing the current business -- current state of the business and you have built a plan, which is very realistic and achievable. And the point of my question is that in the past, you had certain assumptions. In comparison to the past assumptions, how do these numbers compare? You did not indicate numbers for fiscal 2028. But according to presentation last year, in fiscal 2027, OP margin of 10% or above is to be achieved without onetime revenue. So looking at that, based on that, it seems that you have revised numbers downward. That is my impression. Could you address this? If there were modifications, specifically, what did you revise?

[Interpreted] Thank you for your question. Our policy is to strengthen organic business but to improve profitability. That policy remains unchanged. We discussed in reviewing fiscal 2025 that we have, including core operating profit or own capabilities or organic business in terms of organic business, we believe that we are achieving solid growth. On the other hand, as for medium- to long-term growth, we would like to enhance pipeline further. And it's not that we will be licensing out without any careful plan. And based on both of these concepts, rather than pursuing just a short-term profitability, based on onetime revenues, the -- will be strengthening organic business. And I would like to ask Mr. Oyama, if there are any additional comments.

[Interpreted] Thank you for your question. JPY 1 trillion and JPY 90 billion target were determined based on recent conditions, including progress in LEQEMBI and reimbursement status in Europe. As we discussed in earnings presentation session in Europe, we are -- we have developed more conservative plan for the next fiscal year. And based on that, we have reviewed the plans. In the past, in comparison to what you have seen. In the past, when we look at the numerical values, there may have been some that might have appeared inferior. But given the current situation, we have developed these plans, which are more feasible in terms of achievement.

[Interpreted] As a follow-up, I believe that towards best scenario, you have the next 3 years, LEQEMBI SC approval may be delayed than expected. I believe there were a number of factors. Additionally, I would like to ask you regarding your views on peak sales of LEQEMBI. Has it not changed?

[Interpreted] We would like to limit the number of questions to one per person.

[Interpreted] Then I will withdraw my question.

[Interpreted] Next question, please.

[Interpreted] This is Seki speaking from UBS Securities. Regarding your projection of profits for medium to long term for the growth in the future, you are going to build the management base and you need -- you are going to make steadily investment over the 3 years and after the 3 years and then LENVIMA will come [indiscernible] will come in 2026 and [ Etalanetug ] may be launched. At the time, as you may be working through the partnership, but therefore, you may suffer from a lower profitability. In the first and second year, the profitability may be compromised. You mentioned the dramatic growth. Of course, the top line should be growing? And what is the expectation level should we have regarding the profitability level?

[Interpreted] Thank you very much for your question. Well, increased generation of the profit, what is most important is what is the -- one of the most important points is the reduction of costs. This antibody drug is -- will continue to be the important treatment. E2511 is a small molecule though. So we needed to increase our skills when it comes to the manufacturing to antibody drugs. So that is where we have expectation. And in relation to this, if you have any supplementary comments, Mr. Oyama, please.

[Interpreted] Let me make a supplementary comment. I believe that LEQEMBI is going to make contribution to profitability going forward. As we said last month, in FY '26, R&D -- excluding R&D expenses, we said that we are going to turn it around into the profitable business in FY 2026. So going forward, blood-based biomarkers and SC-AI are coming from now on and showing the cost over sales ratio will be shown, and LEQEMBI itself is expected to grow dramatically. And in addition, we have tau and narcolepsy treatment will contribute. And oncology, I'm sure that LENVIMA sales are going to decline. So this will be made up for by the management efforts. But LEQEMBI's contribution itself is expected very much for -- when it comes to the contribution to the future profitable -- profit level.

[Interpreted] Moving on to the next question, please.

[Interpreted] I'm Ueda from Goldman Sachs. Regarding fiscal '28 and KPIs, I also have questions. I especially would like to ask about cost of goods and cost of manufacturing related to cost. Cost will be increased, and I believe the assumption is a rapid increase in cost of production. For LEQEMBI, is fiscal 2028 going to be the peak? As for R&D spending, in comparison to when LEQEMBI was in development, I believe it is at a lower level, but there will be more late-stage products, and there may be in-licensed products, including upfront investment, should we expect some upward adjustment possibilities? How will it cost -- how will it control cost?

[Interpreted] Regarding R&D spending, CSO, Dr. Ido will explain; and our Chief Business Officer, Mr. Iike, who is also responsible for production, will address question regarding cost of production.

[Interpreted] Thank you for your question. Regarding R&D spending, recently, lecanemab, LEQEMBI-related R&D expenditure is now picking out. And that is a very large factor. And next-generation Etalanetug and for Ledasorexton, there will be reallocation to these products. In the 3-year plan that was just presented, within the amounts that were indicated, we expect the R&D investment to remain. And further, there will be further peaking out of LEQEMBI. So in the next 5 years or so, we will continue with this plan.

[Interpreted] Next, about cost I would like to respond. This is Iike speaking. Product mix will be shifting from that centering around LENVIMA to that centering around LEQEMBI in the next 3 years. We will see a transition of top product -- or shift of top product. In terms of cost of goods, small molecule LENVIMA and antibody drug LEQEMBI are different. This change in the product mix is the biggest factor. Cost goods ratio? Cost ratio, however, can be changed with improved efficiency in antibody production and through control of production cost and volume will also increase. So there can be cost ratio -- is to be controlled. That is the assumption. But because of the product mix change, that is why we have these numbers, as I indicated before.

[Interpreted] Are there any questions? Then we'd like to invite online participants. Muraoka-san from Morgan Stanley Securities, please unmute yourself and start asking your questions.

[Interpreted] This is Muraoka of Morgan Stanley Securities. I also would like to ask a question about costs, because up to 30%, the cost ratio is going to increase to 30%. So the cost ratio of LEQEMBI be should be above 35% royalty in a single digit though. Maybe this is the other side of the same coin? Efforts to reduce costs, but this is to be manufactured, produced by [ Biogen ]. So I think there is a limit to what you can do. And also the U.S. government's policy and the manufacturing ratio in the United States must be increased, and that may affect the cost ratio as well. Sorry, digressed a little bit. My question is about this cost ratio to improve margin of LEQEMBI. So working on the reduction of the cost of LEQEMBI, what specifically Eisai can do? What is going to be asked to Biogen for their cooperation? Could you please elaborate more specifically?

[Interpreted] Yes. Thank you very much. As Eisai, the production efficiency and packaging, we are considering utilizing our own in-house plants, increasing the utilization ratio of our plants in order to improve the manufacturing costs. Through collaboration between Eisai and Biogen, we would like to realize that. Mr. Iike, do you have anything to add?

[Interpreted] Yes. Thank you very much for your question, Muraoka-san. As you said, regarding the antibody part of LEQEMBI is made by Biogen now. But the culture and purification or improvements or processes are based upon our discussion, of course, led by Biogen, but these will be implemented as an improvement. When it comes to the formulation and packaging, these will be outsourced to other companies or we are utilizing our in-house capabilities. So which will be further improved. And SC or IQLIK, we are working with [ Terumo ]. We ask Terumo to manufacture this device. And this will be scaled up through investment by Terumo. And this will contribute to the better control of the costs.

[Interpreted] Understood. So any visible improvements? Do we have to wait until 5 years? Or do you think this can be realized within 5 years?

[Interpreted] No, not so long. We have already seen and we have been already conducting these activities, and we will continue to do so.

[Interpreted] Next, Mr. Yamaguchi from Citigroup Securities.

[Interpreted] This is Yamaguchi from Citi. Can you hear me?

[Interpreted] Yes, we can.

[Interpreted] I have one question. About LEQEMBI , you have given an update. Last fiscal year, [ 880 ] and now JPY 143.5 billion. And 2 5 0 to 2 8 0 and now JPY 300 billion in '27, it looks like this trajectory is understandable. If we exclude the fiscal '27 number, but should we look at only '26, '27, '28? Fiscal '27 number, it seems that this number is off in terms of assumptions from the other numbers. It's a 3-year plan, so it shouldn't -- we paid -- should we not pay too much attention to the middle year fiscal '27 and look at the 3-year as a whole?

[Interpreted] Thank you for your question. On a rolling basis, we will be reviewing the plan, as I have mentioned earlier. For example, amyloid therapy AAT market development will be taking into account. European reimbursement situation in terms of LEQEMBI will also be taken into consideration in describing the outlook in this trajectory. So that is the background of the change, as I have explained.

[Interpreted] So I see that you will be revisiting the plan on a rolling basis every year?

[Interpreted] Yes.

[Interpreted] From Macquarie Capital Securities, Mr. Tony Ren, could you please unmute and ask your question, please?

Hello. Tony Ren from Macquarie, can you hear me? Okay. Perfect. Yes, thank you for taking my question. So on Slide 28, you guys mentioned -- this is probably a question for Ido-san. You mentioned using MRD, minimal residual disease for solid tumors based on experience with LEQEMBI. MRD is usually used in slow progressing indolent blood cancers. In most solid tumors, right, we would usually look at overall survival and sometimes together with progression-free survival. So could you -- could you explain to us which cancer types do you have in mind with your MRD or ctDNA approach? So for example, would it be in colorectal cancer? Would it be in bladder cancer? And how do you think this will be used as an endpoint? Would it be added to overall survival or progression-free survival as an endpoint using clinical trials? Yes.

[Interpreted] Thank you very much for your question. As you pointed out, this MRD is particularly used for hematological cancer. So this is discussed a lot in hematology. But we are not sticking to that. Actually, we have been utilizing the knowledge accumulated in the solid tumor so that we can focus on the same ROD in solid tumors as well. As we explained, MRD, perioperative adjuvant before or after adjuvant, not only with that, but there are 2 significance. First one is resectable cancer. The surgery and after the local treatment, MRD will still remain and that will be removed in order to prevent the recurrence and also another advanced progressing cancer, the drug-resistant treatment resistant residual -- drug-resistant -- drug whole persistent cancer cells. MRD remains and then this will deteriorate the prognosis, looking at our data that has been shown. Therefore, particularly regarding LENVIMA, ROCC or HCC, looking at the data and including the biomarkers of the ctDNA, that such data have been analyzed together with other companies. And utilizing such knowledge, we have been able to identify the targets, and therefore, we have decided to run the project, and we'd like to enter into the clinical stage over the 3 years to come.

[Interpreted] Next. From Bernstein Securities, Ms. Sogi, please.

[Interpreted] About LEQEMBI IQLIK gross margin. I have a question. IQLIK and IV, if you compare the 2, antibody volume per patient will be much larger. After August, beyond August, when IQLIK -- after approval, I think it will become -- RAC will become identifiable. But according to the current pricing strategy, gross margin may be much lower. After fiscal 2028, do you expect gross margin to improve?

[Interpreted] Mr. Iike, CBO, will answer.

[Interpreted] Ms. Sogi, thank you very much for that question. Regarding gross margin, not today, but in the near future, we would like to discuss gross margin. Prices are different. Distribution channels are also different. Therefore, it is difficult to make an apple-to-apple comparison. Gross margin that is not too inferior is what we are targeting at. But we hope to be able to discuss this at future timing.

[Interpreted] After fiscal 2028, on a continuous basis, how do you envision? Do you think that gross margin will continue to improve even beyond fiscal 2028?

[Interpreted] Between IV and SC formulation, the volume and how it is distributed in a country, it all depends on these. So I would like to respond at a later date.

[Interpreted] From SMBC Nikko Securities, Wada-son, please unmute and ask your questions.

[Interpreted] Yes, this is Wada of SMBC Nikko Securities. Can you hear me?

[Interpreted] Yes, we can.

[Interpreted] I have a question about R&D, next-generation small molecule drugs. Molecular glue was mentioned in your explanation, is there any pipeline project, which is in the clinical stage? It's a simple question. And is there something molecular glue can be made into a platform. I don't think that there are many players globally who are able to roll out horizontally, the platform of molecular glue. Have you established such a molecular glue platform?

[Interpreted] Thank you very much. Regarding the clinical pipeline, this is to be utilized for the next-generation development. Over the coming 3 years, it's included in the pipeline for the 3 year. In this lab, which has been developed in oncology, this was found to be molecular glue. Starting from that, we have continued to accumulate our knowledge. And this is not something that we are trying to do in-house through collaboration with the University of [ Dundee ] and utilizing the synthesis capabilities and know-hows combined together with them. And also, we have a collaborative research project with start-ups and -- to make it into a platform and for running the studies. And not only the chemistry but including the biology, the compounds will be synthesized in large volume on the plates and then the biological activity will be studied and SAR will be taken in short term and our chemistry capabilities of Eisai will be combined with it so that we can make it into a platform or pipeline, more visible assets in pipelines. I hope that we can share with you more updates going forward.

[Interpreted] Next, from the members of the media who are attending in person, we would like to take questions. If you have a question, please raise your hand. Yes, please.

[Interpreted] I'm Itaka from Yakshim Plaza. Innovative clinical trial. I have a question on this. I think this question is addressed to Dr. Ido. AD continuum treatment strategy mentions synapse E2511 synapse regeneration. Synapse regeneration, it's not limited to AD continuum, but wide-ranging diseases may be applicable that seems to be the case for amateur. A lay person earlier as a security analyst discussed MRD question was raised. I understand that this is still not in the clinical development stage, but what kind of drug is this going to be? What do you have in mind?

[Interpreted] Thank you for your question. E2511, for the first time, we have presented in detail at this time. So let me introduce the background. This is TrkA NGF-receptor activation. Synapse, similar to snaps, this is axon, which is a pathway for ectricity and protein. And this axon may be weak in cells, but [ cholinergic ] neuron expressing receptor, including that there will be revitalization. And the concept is to revitalize that cholinergic activation part, including synapse and Axon. AD, I think, will be the most suitable disease as an initial target. But the underlying philosophy is that biology is common. With the same biology, we can apply same biomarkers and define no disease. What is near is DLB? What is near to AD is the LB, lewy body dementia, included other dementia may be potential targets. And beyond that, as you've mentioned, based on biology, we would like to expand the target diseases where this can be effective. As for the second part of the question, MRD, in in-house drug discovery, we believe we can utilize our strength in development in MRD. Small molecule, of course, will be targeted.

[Interpreted] Is this going to be an injectable MRD drug? What is going to be the formulation?

[Interpreted] Perhaps at a later date, we hope to be able to provide more detailed information. Orally administered drug will be more convenient for patients. So we will target that. But based on mechanism, it may differ, so we would like to discuss more in future timing.

[Interpreted] Any other questions?

[Interpreted] My name is Horiguchi. I'm from [ Nikka Yakugyo ]. If possible, I would like to ask Mr. Naito, COO. The succession of COO. Earlier, COO Naito suggested that they would like to see the dramatic generation change to younger -- much younger generation. So currently, including the succession plan, what kind of discussion are -- do you have internally now? If you have anything that you were able to share with me, please?

[Interpreted] Thank you very much. We are the company with outside independent directors. So this is not the kind of discussion which can be concluded only within -- among the people inside the organization. I hope you can understand that first. And the representative Director and Senior Executive Officer as well as Mr. Iike, who is also -- shares the similar title, and it used to be called the information meeting, and now it is called IR Day on corporate strategy. And usually, the CEO has been leading the sessions. But today, we are representing the company, 3 of us are speaking on the company. So we are trying on different styles. I hope that you get the signs of such next-generation management style, which the whole management team is trying to explore. That is what I believe can be shared today. Thank you very much.

[Interpreted] We'd like to take the next question, please.

[Interpreted] I'm [ Tomioka ] from Yakuji Nippo. In -- was not discussed during the presentation today, but if I may, I have a question, since I believe this is related to management strategy. 10% of domestic pharmaceutical business is accounted for by generic OTC drug. What is the positioning of OTC business in the next years? Daiichi Sankyo in April, said that they will focus on new drug development and this announced sales divestiture of OTC business. In addition to pursuing new drug development, you are also engaged in OTC business. And what is the benefit? Any recent challenges that you see in OTC business as well?

[Interpreted] Thank you for your question. This is an event that was formally called information meeting. And as much as possible, we would like to focus on what was presented in the presentation. On the other hand, I'm also -- I believe that a nondrug R&D is also very important. And if I may share my view with you, first, the -- this is the business that Eisai started with in the beginning and OTC is very important as a contact point for consumers. E2511 was discussed earlier, but in a way, Alzheimer's disease or most diseases are abnormalities, roughly speaking. And -- but more broadly, antiaging is a theme that we can pursue. From that perspective, OTC business is a very important theme. It will continue to be important for Eisai. Thank you.

[Interpreted] Any other questions? Then we'd like to invite a person, [ Mochizaki-san ] from Mix who is participating online. Could you please unmute yourself and ask questions? Because of the closing time, we would like to make it the last question.

[Interpreted] [ Watazaki ] of Mix. Can you hear me?

[Interpreted] Yes.

[Interpreted] Regarding the management base, I have a question. MOQT under the new institutional system, what is the aim of making it a new system? And the efficiency improvement? And what going to be the integrated strategy? By improving the manufacturing efficiency, which is expected to contribute to the profitability of the company, could you please give us your view on the strategy?

[Interpreted] Thank you very much for your question. Our -- my response may be overlapping with what we responded. So -- but again, I'd like to ask Iike-san, Chief Business Officer, to respond to your question.

[Interpreted] Thank you for your question. So far, at Eisai, well, we say CMC, the API and formulation, R&D division and the commercial production division were separate. The corporate officer in charge was also different. Currently, Ms. Akiko Nakahama is leading both manufacturing, API formulation, starting from R&D phase to -- through getting approval until the commercial production, all managed under one umbrella. And particularly regarding biologics or antibodies, including LEQEMBI and Etalanetug is going also -- antibody drug. We needed to have a continuum, otherwise, there may be inconsistency, which may lead to inefficiency. Organizationally, that's what we would like to avoid. And Q meaning quality is also under the same organization so that we can take integrated motor to eliminate waste and establishment of supply chain from R&D through commercial production, we can adopt the consistent approach.

[Interpreted] Do you have any specific numbers as target? When it comes to improvement of manufacturing efficiency, for example, some percentage points and so forth.

[Interpreted] It will also depend on the product mix -- mix of -- mixture of cost ratio have been presented by Mr. Oyama today. Of course, we have more -- much more detailed analysis internally. But what we are able to present to you today is based upon the mixture of different cost ratios of different products.

[Interpreted] With this, we would like to conclude today's Investor Day. If you have any follow-up questions, additional questions, please contact PR or IR departments of the company. We would like to conclude today's Investor Day on corporate strategy. Thank you very much for taking time out of your busy schedule to participate today. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]