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

Thank you for taking your time to attend fiscal 2025 Eisai Opinion Exchange Meeting on Value Creation Report and ESG. I will be serving as your moderator today. My name is Tokunaga and I serve as the Head of IR. This meeting is held online. Please check our website as the presentation materials are available through the website. In the Opinion Exchange meeting today, we would like to exchange views with you regarding Eisai's initiatives of value creation. The purpose is to make the most of the opinions we receive today in the management going forward and to reflect the feedback in the planning and production of the value creation report next year and beyond. Today, we would like to convey to you how LEQEMBI's social impact is visualized and how our initiatives are affecting the society, what contributions are being made from the dementia area initiatives, which is the source of the competitiveness of Eisai as featured in Value Creation Report 2025 and how Eisai's nonfinancial capital, in particular, R&D promotion, brand strengthening and employee engagement are contributing to and linked to the corporate value enhancement. As for the agenda today, Mr. Terushige Iike, Chief Business Officer and Chief IR Officer, will present advancing our materiality and nonfinancial capital initiatives in a presentation format before panel discussion on initiatives and medium- to long-term vision in the dementia area by Mr. Keisuke Naito, COO and Chief Growth Officer; Mr. Teruyuki Masaka, Chief HR Officer, also in-charge of Sustainability; and Dr. Katsutoshi Ido, Chief Scientific Officer. At the end, we plan to have a session for Q&A and exchange of views. We also have Ms. Minamida, Head of Sustainability Department. In the final part, we also welcome questions on sustainability. Now we would like to begin our presentation. Iike-san, please start.

Thank you very much for taking time to participate in this session. Now could you please show the next page. I would like to spend about 10 minutes to give you the overview. What you see here, this page show our core concept of Eisai. We have corporate concept, which has been incorporated in the articles of incorporation as the first company to do so, perhaps. And as you see on the left-hand side, the corporate concept is shown and a business model in the middle. And before that, on the left, you said that in order to be sustainable with the society, we have formulated a new Eisai's future creation strategy. As the input to promote SDGs, we have the intellectual capital and human capital, which are very important for our industry and business. As you know, dementia and oncology, global health in these areas, we are inputting our management resources. And this is also described in the articles of incorporation. We put importance on the sequence of mission and results. As a result of our business, the capital obtained through the business activity will be larger than what we invested and the PBR improvement will be aimed at utilizing the capital. And as a result of the business regarding the value we provided to the society, which is not represented in the sales and value and also social impact index are continuing to be utilized. Through the business activities, the capital which is generated will be reinvested into the next business. And this is the Eisai's social -- the value creation model. Eisai's social impact creation model. And next page, I would like to talk about our materiality. About 10 years ago, since 2016, Eisai's materiality has been disclosed. In June 2022, we amended our articles of incorporation. And what has been newly added, the social good in the forms of relieving anxiety over health and reducing health disparities and to enhance corporate value in the medium to long term. For these purposes, we have considered material topics. And 2 years ago, starting in 2023, we have started to disclose this new materiality. On the vertical axis, you see the stakeholders satisfaction, and we are trying to sustainably maximizing corporate value while striving to satisfy all stakeholders. And on the horizontal axis, this represents Eisai's intrinsic corporate value, social impact and financial value and improvement of PBR. And based upon whether or not there is a confirmed correlation with PBR improvement, we prioritize these items. As you see here, material topics from 1 through 5 are positioned as particularly important material topics and towards 2030, long-term goals and KPIs and associated risks were set through deliberation and confirmation by the Board of Directors. Next, please turn to the next page. This shows the social impact creation targeted by Eisai. There are 3. First one in dementia area. This is the social impact of LEQEMBI in the United States in the dementia area. It's not solely based upon the price of LEQEMBI, but the value that patients and their families can gain from administering LEQEMBI are the basis for calculating this value. And in the middle, global health DEC tablets, diethylcarbamazine, the social impact of the free provision of the DEC tablets in the global health care area. By providing DEC tablets free of charge and they value of avoiding chronic lymphatic filariasis or reducing the number of attacks through the provision of DEC tablets are calculated into economic value. At the very bottom, employee impact accounting was introduced as a social impact creation method for human capital. For our employees, out of the wages paid to our employees, the percentage of the contributions to the society, that has been calculated as the value in terms of human capital investment efficiency. Next, Page 6. This is a rather busy slide, but this is about the materiality, number one. Number two, there are long-term goals and targets and KPIs. Last fiscal year in 2024, some progresses were made. These are also described here. First one, in dementia area. Last year, during the fiscal year 2024, LEQEMBI in 5 regions -- all 5 regions of our business, we have obtained approvals and have been -- LEQEMBI has been launched in all these 5 regions. And the targets for fiscal 2025 materiality was set up in 2023 in 5 all regions, obtaining the approval and achieving the reimbursement were set as the target. However, due to the change in the reimbursement planning in each market, since the last year's value creation report, getting approval in all 5 regions and early realization of launch of LEQEMBI were set up as the new targets. And during FY 2024, LEQEMBI were delivered to 23,000 patients all over the world in the United States and JPY 503 million was created as the social value. In fiscal 2025, we contributed to 350,000 people globally, and we plan to create about JPY 80 billion of social impact in the United States. In fiscal 2030, globally, we plan to contribute to 900,000 people and create JPY 1.8 trillion of social impact. But rather than such far out into the future, what about the near term in 3 years' time, for example, because of that request in information meeting in March, we also showed our outlook for fiscal 2027. LEQEMBI maintenance therapy, subcutaneous formulation submission status and blood-based diagnosis, we are making steady progress. And number two, at the bottom of the slide, Lenvima in fiscal 2025 -- in fiscal 2024 made contribution to around 80,000 people globally. As for the target for fiscal 2025 for Lenvima, we target to achieve a new indication approval. LITESPARK-011 study, this is in combination with belzutifan in RCC second line, we achieved the primary endpoint, and we are consulting with the authority towards submission. When materialities were established in 2023, Lenvima global peak sales target was JPY 500 billion. However, because non-small cell lung cancer indication study primary endpoint was not achieved and target number was adjusted in value creation report last year, JPY 300 billion level target will be maintained. Next, on Page 7, in global health area, we are focusing on lymphatic filariasis, mycetoma and malaria on these 3 diseases. In the last fiscal year in 2024, regarding LF, cumulatively around 2.5 billion tablets have been provided for free, creating approximately JPY 500 billion of social impact. In 15 countries, mass drug administration was completed. Regarding malaria, last year, in fiscal 2024, a new compound or new therapeutic drug candidate, one of the candidate entered into clinical trial. In this fiscal 2025 for lymphatic filariasis, the biggest endemic country, India and in 18 other countries and mass drug administration was completed, contributing to about 29 million people, creating approximately JPY 520 billion social impact. Next, please turn to Page 8. Maximizing human capital. Number four, penetration of hhc concept and improving employee engagement, diversity, especially women's participation and employee impact show progress. We are also making steady progress in financial strategy, and we have realized financial soundness and optimal capital structure towards achieving fiscal '25 and fiscal '30 targets, we will continue with our efforts. Please turn to Page 9. Next page. This is a story in dementia area. For more than 40 years, we have been engaged in research and development and commercial activities in dementia area in the development of Aricept, it was mild Alzheimer's disease, but severe Alzheimer's and Lewy body dementia were added indications and [indiscernible] and other formulations were also developed. In this process, global development, global distribution and medical activity know-how and human capital were acquired. And we were also able to build a network with the academia, investor community and other communities. Employees are also spending time with patients -- dementia patients and empathized with them. And through this sense of ownership and sense of responsibility have been fostered amongst our employees. We have failed a number of times in developing new drugs, but we succeeded in developing LEQEMBI, and we are now devoting ourselves to research and development of the drugs to follow. This shows dementia area, and this does not touch upon oncology, but financially, the value that we have gained from Aricept has been invested in oncology and in oncology area, Lenvima became our main product. And this, in turn, has been providing resource invested in development of LEQEMBI commercialization of LEQEMBI. In this diagram, there are 3 green circles. R&D expenses, number of Phase III studies and personnel expenses, according to Yanagi model, these show positive correlation with PBR, even though with a time lag, but these are correlated with PBR. We would like to continue to build dementia ecosystem and continue development for the pipeline to follow LEQEMBI, and we would like to expand social impact. In doing so, and in dementia area, we would like to realize social needs -- satisfy social needs. As for value creation by Eisai, especially in dementia area and as for value creation, we also are working to enhance nonfinancial capital. And these efforts will be discussed in the session to follow. And thank you for your kind patience.

We will now move on to panel discussion. During this session, initiatives in dementia area and medium- to long-term vision in the dementia area will be discussed by Mr. Naito, COO; and Mr. Masaka, CHRO and also in charge of sustainability and Dr. Ido, CSO. Now we would like to move on to the first topic, topic 1, growth and operation concept. And here, in March 2025 in information meeting, medium- to long-term growth vision was presented. What thoughts and ideas underlie growth and operation concept, Keisuke-san, please.

Good afternoon, everyone. I am Naito, serving as Chief Operating Officer of Eisai, and thank you very much for attending this event. Regarding this topic, growth and operation concept, I would like to offer my commentary on this growth and operation concept. As the name suggests, growth and operation. And we are looking at these -- how these relate to corporate activities. You see circles. We separate these 2. The one circle is about growth. At Eisai, in value creation at Eisai, we have R&D, production and delivering to physicians and patients in commercial, we -- the value creation is supported by this value chain, and we are continuing this cycle of these 3 functions, R&D, production and commercial. And that is at the core of the growth function. This growth cycle should be stably supported by operational functions. Growth and operation concept is shown here. And to strengthen this concept, we have pillars: number one, drug discovery R&D; and number two, creation of new area of R&D in nondrug discovery area. And the third is structural reform. These are 3 pillars to enhance growth and operation concept. As for drug discovery R&D, in neurology and in oncology in these key areas, we have accumulated human biology knowledge and within our company and with other companies, we are in partnership. And through that partnership, we will be creating next generation of drugs. And that will be a very important growth engine of Eisai. We will also be using AI and translational research and cross-functional research to efficiently continue drug discovery process in-house, while at the same time, we will pursue -- continue to pursue partnership so that we will continuously be launching new products and accumulating technological assets. On the right side, nondrug discovery or creation of new area R&D is shown. There are daily health care issues that cannot be addressed by pharmaceuticals, behavioral life environment, health care evidence, such a multitude of data can be utilized to create solutions. Data can be utilized to develop solutions. The drug discovery or pharmaceutical companies are strong in this area, but the point is that we will also be using non-pharmaceutical technologies to develop solutions. In this new area, R&D includes digital and hardware sensor for robot to look after the patients. How can we utilize knowledge and how do we produce output? It may be different from drugs, in case of drugs, it will be pharmaceuticals. In new areas, it may be behavioral changing digital application or nursing care robot. But at the core, data accumulated and utilization of data are common to both areas. Such knowledge and data can be synergistically used in R&D model. across drug discovery and nondrug discovery in translational activities. And we believe that this will create value for Eisai going forward. As for operations at the bottom, structural reform is carried out to sustain continuous value creation. As for specific efforts, global organization mechanism data are being optimized. And in growth cycle, we are concentrating resources. In this way, R&D, production and commercial will be able to dedicate themselves to fulfilling the respective roles. So regarding this basic concept, I think this is what I can say now for this part.

Yes. Regarding the concept in fiscal year 2025, this concept was formulated, and we are now currently in the ninth month of fiscal 2025. So implementing these in our work and from the management perspective, what kind of progress you have seen and what challenges are you seeing now? Keisuke-san, could you please speak about these? And after that, I would like to ask Ido-san to give us your perspectives on the progress or efforts that you have made and the challenges that are emerging from the perspective of R&D.

Yes. Thank you. So the -- in the background, you see the printing of the growth and operation concept that I mentioned earlier. And if you look at the top left, this is about the R&D in drug discovery and growth update. And the top right area is the R&D in the new areas and the growth-related updates. And at the bottom operation, light blue color portion is about the update on operation. And in the first half of 2025, in our core business, pharmaceutical business, which has made a steady progress. And centering on this, the profit structure was established in order to achieve the improvement in both the sales as well as profit. And we have secured the profit in order to reinvestment into the growth areas and growth and operations have been started to run smoothly. First of all, in order to support the core business growth, LEQEMBI in the top left, in more than 50 countries and regions, we have obtained approval for LEQEMBI towards the achievement of the fiscal year's target, I believe that we have been making steady progress. And for IV, maintenance treatment approval to be obtained -- has been obtained and also inflection point, very important and lifestyle management for LEQEMBI, life cycle management of LEQEMBI, the submission for approval of initiation treatment of the cutaneous formulation and the subcutaneous formulation as a whole and also the initiation treatment for -- in the submission for approval, we believe that we have been making the steady progress, and we are making progress in the establishment of pathway for diagnosis and treatment. And on the other hand, there are some challenges. In order to contribute to even more patients, we must build securely the environment, and we need to enhance the market share of LEQEMBI in each market. We believe that this is one of the challenges we face. As I mentioned earlier, the SC. I click over LEQEMBI and the blood-based biomarkers or BBM to be adopted early. And in addition, importance of long-term continuous administration should be promoted so that we are able to have patients and their family that understand the value of LEQEMBI treatment. In addition, in our new R&D area for the elderly facility, care facilities, Life Rhythm Navi + Dr., this is a monitoring solution for the facility. And we have made the EcoNaviSta as a subsidiary and data science technologies as well as the data and in the new area of R&D, we would believe that we have acquired significant capabilities. Going forward, utilizing our medical reps as well as the contracted distributors, LEQEMBI, [indiscernible] promotion channels are available. So we would like to utilize them in order to accelerate the penetration of Life Rhythm Navi + Dr. in hospitals and nursing homes. And also monitoring robotics with Life Rhythm Navi + Dr. various source of information will be collected considering the data compliance. And we believe that we are going to make progress and utilize such data sources to develop new solutions. Lastly, regarding the operations. So globally, for the optimization, we needed to carry out the structural reforms. During 2024, we carried out reforms in the Americas and EMEA in 2025. We carried out the reforms in these regions. As I said earlier, growth and operation perspective has been discussed to give you the current status of progress and the challenges we are facing now. So now CSO, Ido-san, could you please speak from your perspective of R&D?

Thank you, Keisuke-san. I am Ido from R&D. We at R&D had a major reorganization in spring this year. Leaders have various different backgrounds, and we had a new start in the last 9 months. The purpose of the reorganization is that at the core, we have positioned translational organization to concentrate human biology, utilizing that PK/PD modeling, simulation functions are fully utilized from exploratory phase to clinical phase. We now have organization that we are able to fully implement this using this foundation for subcutaneous formulation without a large additional study, we were able to file submission, reducing cost and time substantially. This model is not only for LEQEMBI, but for next-generation AD drug development, we are making full use of this. As shown on the left side, we are focusing on anti-MTBR tau antibody Etalanetug. In familial study in Phase I, we were able to achieve a POM suppression. And the data collected here will be accumulated as a human biology and will be reflected in the model. And by continuing this cycle, we are accumulating core capabilities in dementia area. And below that, in neurology, orexin platform cultivated with lemborexant is our strength. And narcolepsy drug candidate, E2086 came out of this. And in the first half of this year, POC was confirmed in Phase Ib, which was a major outcome. Another important area is oncology. And as shown below, Lenvima value maximization. This is, first and foremost, our big theme. And in advanced RCC study with Merck, we achieved the primary endpoint. First-line study is also making good progress. We have high expectations. Similar to neurology, in oncology, we have Lenvima or [indiscernible] or biology knowledge that we have gained from clinical trials. These are concentrated in translational organization and will be utilized in E7386 for which clinical trials are underway and also in MORAb-202 and in the development of the next-generation candidates. As for the challenges going forward, strategic resource allocation is necessary to ensure that we will continue to have next generation of candidates. As for clinical trial-related development for LEQEMBI, this has peaked out. So resource should be selectively allocated to high success probability projects. And we will also pursue joint development with our partner and especially, we would like to enhance the quality and breadth of oncology pipeline. And that is all.

Thank you very much. Now we would like to move on to the further topics on the discussion. We have discussed the growth and operation, and this is achieved by people, employees. How are they feeling about this? At Eisai, since 2021, globally unified engagement survey has been conducted. And during the fiscal year 2023, survey was also conducted. And based upon the results of that survey, we have identified innovation and leadership as 2 global focus areas for improvement, and we have been working on these areas continuously. And regarding this, the results of the fiscal year 2024 global engagement survey became available and the measures to be taken. These will be discussed by Masaka-san. Masaka-san, please.

Yes. Thank you very much, Tokunaga-san. Thank you very much for participation today. And I'm in charge of the sustainability and human resources. My name is Masaka. And what you are seeing now shows the results of this year's global engagement survey. As Tokunaga-san explained, since last year, we have been telling you that at Eisai, innovation and leadership have been identified as the focus areas for improvement. Today, I would like to focus on these 2 areas. First, starting with innovation. Up until the last survey, this score has shown the trend -- downward trend. And this has been pointed out. And this year, however, we have seen the recovery in the score showing the favorable result. And what has driven this improvement was in the area of use of the latest technologies. In almost all regions, the score has shown improvement since last year. And this is particularly related to the R&D. Therefore, I would like to ask Ido-san, who is in charge of R&D, to give us your take.

Yes. Thank you very much. Looking into the movements of the scores and particularly in R&D, I have the impression that there was an improvement in AI. And in almost all entities, we are now able to utilize generative AI. And we have been making -- continuing to invest in AI areas. Therefore, we have enhanced R&D strengths. And I think that these benefits have been felt on the ground. And I talked about modeling and the biomarkers and the clinical function data, AI machine learning have been utilizing analysis and what kind of benefits can be expected for which population and exploration and clinical side, we are now able to discuss based upon the analysis of these. In the actual ground, AI usage is being progressed and particularly in medicinal chemistry, we believe that we are starting to see the benefits. We are usually targeting proteins to the biology and AI and computational science and also that are combined together in order to find the compound which can bound to the very difficult surface as well as we are able to increase activity by 1,000 or 10,000 times in short time period. And in this experimental system, the translational organization, which is in charge of molecular profiling, they have such technology. We believe that, that is a very strong point of us. And we have the mass spectrometry and also samples and immunoassay system, and we have anti-tau target an MTBR-tau243 as well, and we have a very good recognition outside of the company. And this has led to the identification with Etalanetug and the POM [indiscernible]. So we would like to continue to invest in these areas as well. And regarding the leadership, Keisuke-san, could you please give us your take on this?

Yes, about leadership. For 2 consecutive years, the trend is a declining trend. So the top management and myself as the Chief Operating Officer, I'm reflecting on this very seriously. As for leadership items, one, confidence in the decision by senior leadership; two, clarity of business strategies; three, clear future vision. These 3 comprise leadership items, and we see declining trend in all 3. As I mentioned earlier, growth and operation concept is adopted and updating the progress here. And as Masaka-san will later describe, we are implementing various initiatives to address this to turn around this trend. But we believe that we should communicate more and strengthen our communication. By region, there is a more pronounced decline in EMEA. Lenvima, Kisplyx and Halaven, these oncology-related products account for about 60% of the revenue in EMEA and Halaven LOE impact is becoming manifest. Regarding this. In addition to such business conditions, there is a room for improvement in terms of communication to employees as well as a COO responsible for overseeing all of the regions and also Mr. Iike CBO, I believe these are our responsibilities, and we'll make sure to implement measures. And centering around Chief Scientific Officer, Ido-san, we are enhancing our pipeline and the successful launch of LEQEMBI in European region, these will also be very important milestones, and we will steadily make achievement -- progress in these businesses. And I would also like to ensure good communication with these 2 measures, I would like to improve engagement. Now I would like to ask Masaka-san to discuss some concrete measures regarding communication.

Yes. Thank you, Ido-san, Keisuke-san. Thank you very much. As Keisuke-san mentioned, there is a point of communication, issue of communication. Please look at the left photograph. This was carried out on September 5 called Eisai Casual Connect. 6 directors attended and with employees, various communications were held. Employees have raised many questions. This is about attended by 380 employees at the same time, about 15% of employees in Eisai Japan. The biggest objective of this is to reduce the distance with the directors and to have a sense of familiarity with the top management and to understand the business strategy. So we showed a video of cooking of dishes good for cognitive functions, and we also utilized online chat interactions. In the end, we conducted anonymous questionnaire of the attendees, and we were able to achieve a high score of 8.3 out of 10. Please look at the photographs on the right side. These are initiatives that we are contemplating at the moment. We are also planning to communicate the direction of the company very clearly so that employees can work with a sense of persuasion and conviction. First, synergy forum. This is an internal event to show all of our HR-related initiatives. We plan to hold this in February. And for about 2 hours, HR will be introducing initiatives. Employees can take part on topics of their interest. This is not limited to Eisai. We also plan to include collaboration with other companies. Left bottom, Cross Talk Caravan. This is a caravan by directors roving around all of the regions to conduct small meetings. Ideally, we would like to have such caravan 100 times in a year. We are also considering stock-based compensation as shown at the right bottom. By providing stock-based compensation to all employees, we would like to increase the sense of participation in the management by the employees. Next, please.

I'd now like to move on to the next topic. We are discussing HR-related initiatives, employees under the hhc concept, are realizing social good, and they are able to directly engage in realizing social good, the only stakeholder who are able to do so. And we would like to leverage the strength of each individual and achieve synergy within an individual and synergy in the organization to create an impact. So energy, synergy and impact. Energy within myself, synergy amongst individuals and impact. We are often discussing these 3 terms. What human capital management is promoted by Eisai. Once again, as the final topic under theme 1, what is Eisai's human capital management and innovation creation and impact on corporate value, we would like to discuss that. On this topic, Masaka-san, please.

Since 2023, a report called the human capital report has been issued. And we are receiving increasing number of questions from investors because we have published this report. So let me share with you briefly what it is. HCR human capital report is issued originally by the HR of Eisai. And HCR 2025 had more than 130 pages, a very voluminous report was issued only for the information related to HR of Eisai. In the interest of time, this report has been highly evaluated by many people, but I would like to focus on the external evaluation of the HCR, specifically, it candid and frank description of the 4 issues. As you see from the relevant pages of the HCR 2025, this report frankly describes the challenges faced by HR, namely a global HR system has yet to be established. There are issues with the culture that fosters innovation and DE&I promotion system still needs to be improved. And there are various challenges due to the asymmetry of information between the company and employees. Regarding the details, please read through the report. But today, I would like to focus on information asymmetry between the company and the employees, which was the subject of a question. And regarding the awareness of the internal initiatives, we conducted the Pulse survey conducted in March 2024 and '25, and this shows the results of the survey. At the beginning of 2024, for example, only 52.8% of employees had an understanding of the integrated HR strategy, which we recognized as a major challenge. In response to this, we took various measures. If you look at the left bottom, for example, we published a 2-minute HR e-mail newsletter on every Wednesday called Learn All About HR in 2 minutes. Last week, we issued the 100th of such e-mail newsletter. And over drinks, people are able to discuss management issues that is conducted in a project called Project Aka-Chochin [indiscernible] In total, 650 employees participated. And regarding the human capital report, it's not just publishing or issuing. We believe that the post process is very important. For example, in HR, we created T-shirts to conduct promotion activities for this report. As you see on the right-hand side, over 15,000 downloads both inside and outside of the company was achieved. As a result, understanding of the integrated HR strategy increased by approximately 20% to 70.6%, significantly increasing interest and understanding of HR initiatives. So HR will continue to promote our efforts to come across. Next, please. In addition, Human Capital Report 2025 features the following contents. Please take a look at the various aspects of Eisai's people-related initiatives. We would be very happy if you could read through this. And due to the time constraints today, we will only introduce examples of collaborations with our other companies, which are extremely important in Eisai's human capital management. Next. So this past April, 20 people from the HR departments of Marui and Ajinomoto visited our company and followed by 20 people from Chugai Pharmaceutical in May. And we held knowledge sharing events with those representatives from other companies. All these 3 companies are leading Japanese companies in the field of the human capital, and we had the opportunity to discuss and resolve various HR issues through consultation sessions and bragging contests. I believe that this was a very valuable time for us to discuss HR-related issues. In this way, the essence of Eisai's human capital management begins with clearly identifying the challenges and initiatives we face. We believe that the quintessence of Eisai's human capital management also lies in receiving various feedback, improving our HR strategy and using it to further disclose our information. Thank you very much.

Thank you, Masaka-san. Now moving on to theme 2. In this talk session, we will discuss value creation in the dementia area, pioneering the future through drug discovery and nondrug approaches. In the beginning, in Mr. Iike's presentation, Eisai's social impact creation model was presented. Value creation starts with hhc concept, company concept. Starting from hhc concept, what does that mean? Patients and people in daily living domain, we want to understand their feeling by spending the time together. And that is what we call socialization. What kind of socialization activities are we engaged in? And how that is reflected or incorporated in daily business operations. That is what I would now like to ask the panelists to discuss. Ido-san, Masaka-san, Naito-san in that order, please. Ido-san, could you start?

Thank you. I have been working in neurology drug discovery for many years and participated in various socialization with patients, but I always felt that not just in 1 day, but continuing socialization in the same place over the years, I'm able to understand the true feeling of patients. I was engaged in epilepsy drug discovery in the beginning. Textbook says that seizure, 70% of the seizure can be controllable. But while cooking -- while frying food because of generalized seizure, patient suffered a serious burn, and I felt strongly that we must develop a drug that can reduce seizure to zero. And there is also a strong drowsiness due to drug. So I also launched a project to develop drug that causes less sleepiness. I also engaged in socialization when I was working in Boston, autism spectrum or development disorder patients were receiving cognitive behavioral therapy. Pharmacotherapy is important, but non-pharmacotherapy is also very important. I was able to realize that. And we also had such programs in the company at the time. In the middle, -- in the past few years, I have been socializing with MCI patients in university hospitals, engaging in brain exercise, mental exercise and various activities together. And anti-amyloid test was undergone by these patients and patients were speaking of their hopes, and they were also afraid that progression of dementia may not stop. And some of the patients were desperate because their score meant they were not eligible to receive treatment, but LEQEMBI should be a hope. We would like to deliver LEQEMBI to as many patients as possible and importance of early treatment, I'm also discussing that. And we would also like to be able to regenerate nerves or protect nerves even in advanced stage, and we would like to launch such projects. Before becoming forgetfulness, there may be change in behavior and personality because of that understanding of the mild behavioral impairment, we are discussing across the functions, whether it is possible to develop pharmacological and non-pharmacological interventions for mild behavioral impairment. And I've also participated in Relay for Life for oncology in fall. The next CT is what patients are very afraid of. CT is like a school scorecard. But with the blood to be able to test or to alleviate anxieties for recurrence, such anxieties to be alleviated, that is very necessary. And in R&D, we also are cognizant of these needs of the patients. Masaka-san, can you discuss your socialization activities?

Yes. At head office HR, we are also very actively practicing socialization. We will also be socializing -- engaging in socialization with patients. These are photographs from last year. On the left side, with patient advocacy groups, to understand better PMS or postmenopausal syndrome, we used game and understood that this is not limited to certain gender. And if you could look at the right side, the serious menstrual cramps leading to missing business opportunity, such experience is what we heard from patients and to realize how painful it is male employees experienced menstrual pain. And these are carried out at the same time as DE&I event. This was live streamed company-wide to increase understanding and awareness. Keisuke-san, can you share your experience? Can you share your experience?

So Ido-san explained how socialization provided important suggestion and motivation for product development. And Masaka-san discussed how socialization is utilized in developing a good organization institution inside the company. I would like to discuss interaction with people outside of the company, especially patients, how they are facing their symptoms, how they are facing society. I would like to share with you some of my experiences. On the left side, this is a conversation with early onset dementia patient. And what I heard from him was very interesting, but there were some insights that left a strong impression. When the person was diagnosed with dementia, and I'm sure the reaction may differ from person to person, but he said that he felt a sense of relief knowing the cause. To understand to be given diagnosis may be something that people are afraid of, but some people feel that something is wrong. And having a diagnosis makes one realize that it was a symptom of a disease. It is not a problem of the ability to remember, but it's because of disease leading to sense of relief. So in this way, this person was able to accept having dementia and now he is a frequent speaker giving lectures. And with that identity, he is leading more fulfilling life than before being diagnosed. And he was a full of insight. So even with dementia, society should allow people to be fully themselves and to accept dementia and continue to live authentic life, and I want more people to know this. And I once again realized restrengthened my determination to develop drugs for them. Reporting directly to me is a COO office and Global Digital -- together with global digital business transformation headquarters, we have invited nursing and support facility where people are employed called BLG Hachioji, and we sold tissue paper boxes and traditional cloth bags together, BLG Hachioji support facility and facility to provide long-term care while providing employment to people with various conditions, including dementia. And BLG Hachioji said that they want to be engaged in the society and would like to contribute to the society. And he has a place for social contribution, this employment type of nursing care facility -- nursing care service is provided by BLG Hachioji. Together with BLG Hachioji employees, we sold things that were made by people who are using this facility. And through that, we understand the feeling of people with dementia, and we also are seriously considering how we can truly meet their needs. And I believe such culture is deeply rooted in Eisai. You may think that this is only a matter, of course, it is only natural, but the environment, how you perceive environment may be different and needs may differ from one individual to another. But as for the disease, rather than it being the identity of that person, it is only one of the feature or events in the life course of that person. So rather than understanding a person uniformly, we have to look at each individual differently. And in order to make contribution, we believe that pharmaceutical solution can be a very strong solution, which can be a foundational solution. But as for personalization, since drugs have to be effective and have to be provided within a regulatory framework, so it requires intervention by a person with a knowledge of a physician, but there are some gaps in digital hardware that can be used in the daily lives may be able to fill the gaps. So we need to look at both pharmacological and non-pharmacological approaches. And that is one of the things that I've learned from socialization. In this way, the purpose of socialization is that regarding a certain disease, we would like to come up with a new answer, new solution using our expertise. And therefore, we are able to gain insights and become motivated through socialization. And we also should understand new solutions by others. There are 2 sides to the socialization. And we have new activities, new answer to dementia, and this is a material that introduces the campaign which began in March 2025. This does not introduce a socialization per se, but people who are facing dementia, how they are each facing dementia and with our various partners, we are exploring answers and some of the answers and solutions and some of these efforts are introduced. In addition to our efforts made together with partners, our employees' messages are also shared. And this is to introduce colleagues who are working together with us. I hope you will also take a look at this campaign.

Next, we would like to share with you the Eisai's future creation strategy linking sustainability initiatives to enhancing corporate value. So Eisai's future creation strategy. And in March 2025, sustainability strategy or Eisai's future creation strategy was formulated as new strategy. And what kind of a strategy is it? And how is it connected to enhancement of corporate value? Let us explain this. First, Masaka-san, could you please explain this?

Yes. Thank you very much. It's a little bit busy. I'm sorry about that. But what we are showing you is the Eisai's future creation strategy. And before that, in 2022, we amended the part of our articles of incorporation at Eisai. And regarding the human capital management was mentioned. In actually, sustainability was also mentioned in the articles of incorporation contributing to a sustainable society with a long-term perspective. This wording was incorporated in the articles of incorporation, a kind of a constitution for the company management. And at Eisai, based upon the hhc concept, we have formulated a sustainability strategy, which we are currently implementing. And this Eisai future creation strategy, much longer than the medium-term plan, a 30-year plan and also for the further maturation and the growth of the company as well as the society, this is how this strategy is positioned. Next, and based upon the empathy, we have been pursuing the management driven by the empathy based upon the past experience and gaining the empathy, I believe that the stakeholders and employees have been shared the empathy with the shared vision of the future. And also the relieving the anxiety over health and reducing health disparity, such achievement of social good is included in our articles of incorporation. We believe that revenue and earnings will be generated by first fulfilling this mission, and we place great importance on this sequence. In the process of achieving social good, we will pursue consideration for the environmental and also respect for human rights, maximizing human capital and ensuring governance and integrity through empathy with stakeholders. Through these processes, as I mentioned earlier, our articles of incorporation also stipulate a contribution to a sustainable society with a long-term perspective. Next, please.

Now dementia area in -- value creation in dementia area, we would like to discuss pioneering the future through drug discovery and nondrug approaches, Company's efforts, especially LEQEMBI, how is it impacting the society? And Eisai's nonfinancial capital, how is it affecting the enhancement of corporate value. That is what we would like to discuss. Keisuke-san, please.

As we have been discussing at Eisai, we would like to realize a society where everyone can overcome dementia in their own way and use pharmaceuticals and digital technologies to create innovative solutions and come up with new answers to dementia. And we would like to realize a society where each person can pursue a new answer to dementia. We are developing next generation of drugs in dementia market, and we would like to launch one product after another from the current pipeline to change the state of dementia in the society. For example, preclinical AD, we are approaching the preclinical AD. And to a degree, preventative approach can be achieved and combination therapy can also be adopted to maintain cognitive function more effectively. In this way, our pipeline has an impact that can change the way people face dementia and strengthening this will directly lead to having a very strong presence, overwhelming presence. For example, in Japan, and earlier, we discussed growth cycle and presence commercially is a very important -- one important area. We have representatives, medical reps who are highly valued by neurology specialists and key opinion leaders in this area are invited as speakers in many academic meetings that we organize, including Japan Academy of Alzheimer's Disease. And also in oncology area, we are a pioneer of pharmaceuticals, and we have good solutions. But there are also areas outside of pharmaceuticals, and we have subsidiaries that have strong capabilities in developing solutions in non-pharmaceutical areas. In that sense, we think we are very unique, and we have track record in developing drugs and expertise and capabilities. And we also have in-house digital capabilities, hardware development capabilities. Combining these we are collaborating with different industry players, municipalities and academia. We would like to continue with this. Next slide, please. So what we have to do will change over time, but I believe that the source of innovation of Eisai is science, bravery and tenacity. These 3 words show the source of innovation of Eisai. The other day, we had AD Day Alzheimer's Disease Day and concept movie was shown on that occasion. And you see some photographs from that movie on the right side in terms of science, left top shows a team, which is Eisai team, which pioneered research and development of dementia drug for the first time, led by Dr. Sugimoto, acetylcholine hypothesis, which was quite unprecedented was utilized and it was not considered a disease -- dementia was not considered a disease, but challenges were taken on to develop a drug for that with yet to be proven hypothesis. That is with respect to science. And this attitude is quite similar to Wright Brothers who tried an unprecedented challenge of flying an airplane and Apollo 11 after many failures, succeeded in lunar landing. And in a similar way, bravery and tenacity are exerted, and we believe that, that is the identity of Eisai. We would like to continue to base ourselves on this spirit. And in dementia area, oncology area and in new areas, we will continue to take on the challenges and create new solutions. So about the 3 words that I described and starting with science, as I discussed just now, in neurology or Alzheimer's disease, we have new products that are being developed as we introduced on ADD. AD is understood as a continuum and the fundamental pathology, amyloid beta tau and neurodegeneration. Based on that hypothesis, we will continue to test the hypothesis in the repeated process. We deepened our understanding of the disease. And this is the scientific accumulation that will continue to be the foundation of all of our efforts. As for bravery, for example, this shows history related to dementia and our activities and social perception in chronological chart. If you look at the very left, this is from 1960s according to publication, dementia patients who are at no fault were tied, restrained or were put in a room that was closed or drugged to be dizzy. And this is how dementia was treated back then. Care was not given. It was not considered a disease that was the problem, but the people who had dementia that were the problem. It couldn't have been helped back then. But in this way, dementia was misunderstood and was isolated. But in the 1970s, as I introduced earlier, acetylcholine hypothesis was advocated. And dementia is now approached as a disease, not as people who have dementia. And drug discovery efforts began in the 1970s and Aricept was approved in Japan in the 1990s. So it started the era where dementia is approached with a pharmacological intervention. But 170 or 117 or so products have failed in the development to develop dementia drugs. Even mega pharma stopped development because of questions about amyloid hypothesis. But because of science -- belief in science and bravery and tenacity, we finally were able to obtain approval for LEQEMBI in 2023. And opened an era where fundamental pathology of dementia can be approached for the first time in human history, more than 40 years of journey is the history of our struggle and challenge to find answer to overcome the dementia to save people from suffering. Lastly, tenacity. As I mentioned earlier, we will never stop moving forward until the day comes when everyone can overcome dementia in their own ways. We will continue to strive to develop various solutions. And one of the big pillars, we would like to continue to develop groundbreaking treatments. But already lecanemab for early AD to slow the cognitive decline after the onset of AD that has been confirmed through our data, and we are now able to make such contribution to the patients. Going forward, there will be new additional options. For instance, in the bottom left, the first option, as we introduced on AD Day, expansion of the indication for preclinical AD. By intervening at an earlier stage, we aim to potentially prevent the onset of AD itself. Other new treatment option is the combination therapy of lecanemab and the anti-tau antibody, Etalanetug. It simultaneously targets 2 key pathologies, amyloid and tau with the aim of completely suppressing the deterioration of cognitive function after the onset of AD. These are the new treatment challenges, and we believe that we will be able to manage dementia and the patient with the dementia will be able to control or manage their own disease in such new era. And by realizing these new treatment options based upon the chronological order, we will be able to add another event milestone on the chronological line and the science and bravery and tenacity based upon which we will continue to work hard. Next, on the other hand, there are solutions to health issues that cannot be resolved with pharmaceuticals. And that is the goal of the dementia ecosystem, and we will build our capabilities of development on our own. In terms of the direction of development and development of the capabilities in our development in-house, we have been building from the bottom up work. At the very bottom, we developed NOUKnow to monitor the performance of brain based upon the digital index that has been introduced and the number of installation or downloads has been continuing to expand. And Arteryex, this is the group of engineers. And this Arteryex has been developing the quick cult as if you are taking a picture of the results of the health checkup and then the result will be automatically entered into the app and the user and the data volume has expanded and expected to reach 300,000 users by the end of this fiscal year. And Theoria Technologies, “[indiscernible] this is the spin-off from us, data science and data ID issuance is the area this company is engaged in. And also [indiscernible] this has also seen the preview page views increasing from approximately 400,000 per month to approximately 700,000. So we are seeing the steady progress in this as well. At the very top, EcoNaviSta, the Life Rhythm Navi, the core solution within the ecosystem at the very top, we have been able to acquire this -- obtain this as well. And the hardware and sensor capability, development capabilities have been obtained as well. Next page, please. As I have introduced these 3 subsidiaries and Eisai working together. For example, at the very top, the patient journey of the dementia pathway at the very top in arrows, I will not go into too much details about this, but there are a diversity of needs and solutions other than pharmaceuticals. Of course, medicines will continue to be the central part, but we believe that we have been able to establish capabilities in order to provide such non-pharmacological solutions as well. And on the other hand, there are other industry players who are taking -- playing their own part. So we would like to continue to collaborate with those people from different industries.

So we have discussed value creation in dementia area. We will now move on to the final part, Q&A. We would like to take questions on value creation report and ESG. Ms. Minamida, Head of Sustainability Department is also in attendance. We welcome sustainability-related questions as well. [Operator Instructions] Tony Ren-san from Macquarie.

Can you hear me clearly?

Yes, I can hear you.

Okay. Perfect. Let me just ask you a couple of quick questions. Give me just one second here. Okay. Your Slide #17 and #18, right, in your presentation, it appears that in the EMEA region, in that region, it looks like the survey score have declined a little bit. I just wanted to hear from you what might be the reason behind that. Another question is about your LEQEMBI in China over the weekend, we saw that it was included in the very first China commercial health insurance formulary for innovative drugs. From our expert calls, we also understand that the suggested price discount is somewhere between 15% to 50%, 15 to 50, with the medium probably around 30% to 40%. I wanted to see how are you thinking about this? How would this help expand patient access to LEQEMBI and reduce disparity in China?

Naito will address the first question on EMEA survey results in Japanese, please.

Thank you for your question. So once again, as we noted during the presentation, in EMEA region, about 60% of the revenue come from oncology-related products. And one of the main products, Halaven had a loss of exclusivity, LOE, and we believe that this had a major impact. And because of this business condition, we think this was a major factor. And as I also noted in the presentation, regarding our communication and the leadership, is there room for improvement? I believe so. Regarding the change in business conditions, we could have explained more. And that is the result of the engagement survey. So we would like to utilize that going forward. On the second question, it's a little bit outside of the value creation report in ESG. It's related to news release. So after the end of this event, IR will contact you offline separately.

Next, I think the person who has been raising his hand, Hashiguchi-san from Daiwa Securities. Can you hear us?

This is Hashiguchi speaking. Thank you very much. Regarding the engagement survey that was asked earlier, I have my first question about this. Items of leadership, yes, EMEA scores seem to have been done. But regarding the Japan, the domestic network, there is a significant improvement in the innovation, there is a significant improvement in the domestic network. So how do you analyze this? And do you think that there is a possibility that this initiative can be rolled out through other regions?

Regarding this question, I would like to ask Masaka-san to respond.

Hashiguchi-san, thank you very much for your question. As you are seeing on this slide, regarding the domestic network, Japan subsidiaries, I believe that there is a significant improvement, and we broke down this and EA Pharma has shown significant improvement through the structural reforms and the EA Pharma has been reborn and they are promoting their businesses. What did they do under the top management and the management team members had a secure dialogue with employees and the strategy of EA Pharma has been communicated thoroughly to employees. And that is what they did repeatedly. And because of this background, I believe that the scores in the innovation area, particularly have seen improvement in Japan subsidiaries and the latest technologies as well as AI technologies are utilized as well. And regarding the rolling out of the same initiatives, communication to all employees as well as the strategy -- corporate level strategy should be communicated to all employees, and that is the initiative that should be rolled out to other regions and entities. In other regions, actually, that is what they are currently doing already, but in different formats or the initiatives utilizing digital technologies using their various channels, I believe that they are going to show improvement in the scores in the leadership area. So as I mentioned earlier, this is included in one of the measures that we are currently thinking about to roll out. Thank you very much.

My another question is related to the new initiative. The future creation strategy was formulated newly this year. By formulating this strategy, how do you think the future direction is going to be changed, which was not clear to me. And you discussed that you are eyeing at the time 30 years ahead of us. So in 30 years from today, thinking about the future of the company in 30 years from today, what kind of issues or challenges are you going to face going forward? And how are you trying to change your initiatives in line with that? So how this future creation strategy of Eisai is connected to the future direction of the company?

Ms. Minamida is going to respond.

Thank you very much for your question. I am responsible for the sustainability department. So regarding -- thank you very much for having interest in our Eisai's future creation strategy. In the process of formulating this strategy, as we have explained today, we use the HCC (sic) [ hhc ] concept as the basis because this is deep rooted in our mindset. So of course, there were various opinions inside our organizations, whether this is a new strategy is necessary. And hhc concept stays unchanged. And this future creation strategy is based upon this hhc corporate concept. But what is included in the articles of incorporation, the contribution to a sustainable society over the long-term period in order to realize that rather than the medium-term plan, but we needed to have a longer perspective, thinking about the society's maturation and growth of the companies as well. These have to be redefined. That's what we thought. So that's why we have had a discussion over the past 1 year to formulate this future creation strategy. So we are eyeing at 30 years from today. And that is the time when the current children will grow up to be adults so that they will feel like working for Eisai. In 30 years from today, Japan or people in Japan will need to collaborate with other people from around the world. Otherwise, we won't be able to sustain ourselves standing along. So we have to work together with people in Asia, and we have to better the world over in society and as well as our company. So that is the basis for our discussion. As you see, there are 4 elements of this future creation strategy: patients, global environment, society and governance. So this strategy will be the foundation for the management, and we would like to continue to contribute to the patients and their family. And based upon this foundation, we would like to enhance our corporate governance and also the contribution to the resolution of the social issues, including global environment conservation. We would like to work on these issues in the medium- to long-term perspective. And regarding penetration of this into the employees, we would like to utilize the existing platform, and we would like to have all the employees feel like that they own this future creation strategy for -- by taking the measures in next year onward.

Due to time limitation, we would like to take one final question. Koguchi-san from Mitsui Sumitomo Trust Asset Management.

Can you hear me?

Yes.

Koguchi from Sumi Trust Asset Management. I also have a related question on future creation strategy. There is an asymmetry of information between the company and employees and efforts to address this was discussed -- were discussed by Masaka-san and Naito-san. Is there an improvement? I believe that there has been some progress. But as a challenge, looking at the remaining challenges, information regarding future is not clear, clear future vision is necessary. These are the voices from the employees. So about the future, difficulty envisioning the future might mean that difficulty increasing corporate value. That is my naive question. The current future creation process. According to this process, do you expect that this will be improved? Is that why you're emphasizing future creation strategy? So the future vision that is not clear to employees and the efforts that you're engaged in, how are these 2 related?

Mr. Naito will respond.

Thank you. And I hope that my colleagues will add to what I have to say about the future vision. Connect. Regarding Connect, we had conducted a survey and received the survey results. As Mr. Koguchi mentioned about the future and the definition of the future may differ from one person to another and also for future vision. In EMEA, it is also a question of the lack of clarity of the vision. But at a deeper level, there is also business condition that is affecting the survey results. So of course, regarding vision, including the measures that we've presented today, we would like to communicate more to our employees. And at the same time, business sustainability, the sustainability of the business, the 2 are necessary to address the anxiety fundamentally. On the other hand, Japanese pharmaceutical companies in comparison to global mega pharma, global mega pharma, relatively speaking, are difficult to predict. It is not that we have hundreds of clinical trials underway in case of Japanese pharmaceutical companies. So it is difficult to show a complete stability in -- but one of the outcomes that we can show here is, as Ido-san mentioned, and as I also mentioned, constantly, we are launching products, including in-house developed products and licensed products. And I think constant launch is important. So vision, we will continue to make efforts to clarify vision. But what about the latest performance, the business sustainability should also be shown to our employees. I think both are very important. To achieve these 2, I'm sorry, what I'm telling you is quite boring, but I think we have to focus on these 2.

Keisuke-san, with tenacity, I hope you will work on this.

So unfortunately, we have reached the time to close this session. We would like to close the FY 2025 Opinion Exchange Meeting on value creation report and ESG. Before you leave the Zoom platform, you will see the screen asking you to cooperate on the survey. So if you have time, please cooperate in filling the survey form. Thank you very much once again for your participation. [Statements in English on this transcript were spoken by an interpreter present on the live call.]