Nxera Pharma Co., Ltd. (4565) Earnings Call Transcript & Summary

[Interpreted] We will now begin the FY 2022 financial results briefing of the Sosei Group. Thank you very much for taking time out of your busy schedule to join us today. My name is Nomura, CFO, and I will be the moderator for this session. We have around 20 participants and around 150 online watching this earnings call. Thank you very much for your attendance. Today, we have Chris Cargill, CEO; and Matt Barnes, President of Heptares and Head of U.K. R&D. So we will start. I will first explain the FY 2022 financial results, followed by Chris, CEO, on our business strategy and progress and net borrowings; President and Head of R&D on the progress of R&D. And finally, Chris Cargill will again explain our goals and growth strategy for the future. Please turn to Page 5 of the presentation. Page 5 shows the financial highlights for FY 2022. Revenue for FY 2022 totaled JPY 15.5 billion, down from JPY 17.5 billion in FY 2021, mainly due to an upfront fee of $100 million for the licensing of the muscarinic agonist series to Neurocrine in FY 2021. Operating profit was JPY 3.4 billion, a slight decrease from JPY 3.7 billion in FY 2021 due to lower sales and increased investment in R&D. Net profit for FY 2022 was JPY 380 million, also a decrease, mainly due to the impairment loss of MiNA in which we have a certain stake. Cash and cash equivalents increased by JPY 6.5 billion from JPY 60.1 billion in FY 2021 to JPY 66.6 billion, sufficient for continued strategic investments. I will elaborate on this on the next page. Moving on to Slide 6. The upper left graph shows revenue by segment and the lower left graph shows operating profit and core operating profit respectively, with comments corresponding to each graph on the right. If you look at the green box for FY 2022, the top graph shows revenue by segment, which consisted of JPY 4.6 billion in upfront fee income from new contracts, JPY 7.3 billion in milestone payments and JPY 3.5 billion in royalties, other FTEs, et cetera. Regarding upfront fee income in gray, we received a large upfront fee from Neurocrine in FY '21, as I mentioned earlier. So FY 2022 was smaller than that. But we did receive JPY 4.6 billion in upfront payments from 2 new drug discovery partnership with AbbVie and Eli Lilly. These are both very exciting new alliances with multiple targets, which will be explained later. Regarding milestone income in light blue, we recorded JPY 7.3 billion, a significant increase over last year. Thanks to significant progress, including $30 million for the start of Phase II trials for an M4 agonist licensed out to Neurocrine and $10 million for the start of Phase II trials for GLP-1 agonist being developed by Pfizer. Milestone revenues depend on the progress of the pipeline. So as with the upfront fee, there will naturally be fluctuations from year to year. However, given that the number of partners is expanding and development products with existing partners are generally progressing well, we expect milestone income to be more stable than before in the medium to long term. Royalties and others in dark blue were generally unchanged at JPY 3.5 billion, although they were affected by foreign exchange rates and other factors. Next, regarding the operating profit and core operating profit on the bottom half. Operating profit for FY 2022 slightly decreased from FY '21 to JPY 3.4 billion. In addition to the decrease in revenue, which I explained earlier, the increase in costs, mainly due to the enhanced investment in R&D had a negative effect in FY '22. While the impairment loss of JPY 3 billion on M1 agonist in FY '21 was a factor pushing down operating profit. Core operating profit basically follows the same trend, but the difference between FY '21 and FY '22 is larger than that of the operating profit because FY '21 core operating profit does not include the impact of the impairment loss on M1 agonist. On Slide 7, let me touch a little more on R&D investment and SG&A expenses. The graph on the left shows R&D expenses at the top and SG&A at the bottom with actual results and the forecast for FY 2023. While we basically aim to balance our income and expenditures, we are expanding our R&D investment in particular in preparation for significant future growth. Mainly as written on the right side, we are strengthening our platform and translational research functions and are steering our strategy to increase the value of license agreement by conducting clinical trials up to Phase Ib/IIa in-house. In particular, as will be explained later, we plan to move at least 2 development products into clinical trials in FY 2023, and we expect R&D expenses to range from JPY 8 billion to JPY 10 billion. In contrast, G&A expenses will not change that much compared to FY 2022, although we will continue to strengthen our R&D support system and corporate governance. These are the highlights of our business performance. Chris will now update you on our business strategy and business progress. Chris, the floor is yours.

Thank you, Nomura-san, and good afternoon, everyone. We are very pleased with our financial management and performance with another fiscal year profit achieved. Now please turn to Slide 9. So it's wonderful to be back in Tokyo again and to see everyone face-to-face. My name is Chris Cargill, CEO of Sosei Group. I'll now discuss the vision for Sosei Group, and that vision is that we invest in world-leading science to deliver life-changing medicines. Over the years, we have acquired and invested in technologies and capabilities to enable world-leading GPCR-focused drug discovery. As a result, we now have over 40 programs in various stages of discovery and early development. Looking ahead, as a Japanese company, we have an obligation to make a difference to the lives of patients living with unmet need, especially in Japan. So therefore, over the medium term, you'll see us take steps to develop medicines in Japan for Japanese patients. And longer term, we want to establish a Japan pharma business unit that can deliver the best innovations from our pipeline as well as in-licensed innovations from international pharma partners. Please turn to Slide 10. So we have a clear strategy to drive our business forward, and there are 4 pillars of strategic focus. One, we will continue to invest in our world-leading GPCR drug discovery, and SBDD platform capabilities. We will execute new and progress existing major cash flow generating partnerships with global pharma partners. Three, we will continuously transform our in-house R&D capabilities and operations. And four, we will commence steps to develop products for Japanese patients and to build the Japan pharma business unit. Please turn to Slide 11. The first pillar of our strategy involves extending and enhancing our world-leading GPCR drug discovery platform advantage. GPCRs are one of the most important drug target classes with almost 30% of all marketed medicines, targeting GPCR associated pathways. Despite historic success in drugging GPCRs, there remain hundreds of GP's -- un-drugged GPCR targets with broad therapeutic potential. So GPCRs remain as important as ever. Advances in technology have brought renewed excitement to this target class with the pharma trade press heralding the second golden age of GPCR drug discovery is now here. In the past 18 months, there's been a lot of supportive activity. We've seen new private biotechs emerge with hundreds of millions of dollars of venture funding. We've seen AbbVie recently acquired a GPCR focused biotech for over $200 million. And just last week, we saw a new GPCR-focused biotech, publicly IPO on the NASDAQ. All of this activity bodes very well for us, as importantly, we have proprietary technology, a platform with over 170 scientists and over 15 years of know-how. We will continue to invest in our world-leading GPCR drug discovery and SBDD platform capabilities to exploit this second golden age of GPCR drug discovery. Please turn to Slide 12. The second pillar of our strategy involves major milestone and cash flow-generating partnerships, ensuring that we continue to execute new collaborations and progress existing programs with global pharma partners. The income that we generate from strategic licensing provides nondilutive finance to support investment and growth. The left-hand side chart summarizes our activity over the past decade and how these many existing partnerships will underwrite value creation potential into the future. The right-hand side chart details that we are one of the most prolific licensors of innovation globally. This business model ensures we have the diversification of a big pharma, whilst maintaining the catalyst-rich upside of a biotech, which is what makes our business unique. Please turn to Slide 13. The third pillar of our strategy involves transforming our in-house R&D operations. Now much of this realignment was completed last year. However, it will remain an important continuous improvement process. There are 4 initiatives that we have applied to ensure the efficiency of R&D operations going forward. Firstly, target biology is to be entrenched at the forefront of our pipeline planning so that we are investing in programs with a robust and testable hypothesis. Secondly, we now operate with a program-centric model. And this is because we believe traditional linear ways of working in pharma R&D organizations can be inefficient and unproductive. Our scientific functions now exist to support program teams, and it is the program leaders, not the scientific functional leaders who are empowered to make program-related decisions. Thirdly, we opened a second facility at our Cambridge Research Campus, and this houses our newly formed translational medicine team of professionals. This brings together all preclinical and early clinical development talent into a single team in the same facility to support faster progression of programs into the clinic. And lastly, we embrace a quick win, fast fail approach to investing in our programs. When our translational medicine or drug discovery teams generate data that indicates a program is unlikely to meet the thresholds for ongoing investment, we will terminate that program as soon as possible. By terminating programs during this earlier cheaper phase of the drug development process, we don't waste investment capital. This means we only invest in programs that have a better chance of success to make a difference for patients who are waiting. The key purpose of these initiatives is to ensure our world-leading science is supported by operational best practices to drive efficiency, focus and superior long-term value creation potential. Please turn to Slide 14. The fourth pillar of our strategy involves the opportunity to build a disruptive pharma business unit based in Japan. Now on this slide, we have listed several reasons why we believe Japan is an attractive market for investment. With the future potential of our world-leading science and broad pipeline, we will begin to take steps to build a business unit in Japan that can help us deliver innovative medicines to patients. Initially, we believe our focus will be on underserved specialty therapeutic areas, and we will take a U.S. style approach when going to market with a lean development and commercial model, and if ultimately successful, we will use the Japan pharma business unit as the lynchpin unit to expand across the Asia Pacific region. And now moving on, please turn to Slide 16. So this slide details a simplified snapshot of our partnered and in-house pipelines. The green ticks represent all the areas where progress was achieved in FY 2022. And I'll speak in more detail about this on the next 2 slides. We are uniquely positioned as a company moving forward over the next 3 years. This pipeline exhibits the diversification of a big pharma as well as the catalyst-rich upside of a biotech company. We expect to see a number of these programs move into and through clinical development over the medium term with selected partnered programs potentially generating significant milestone income to support our continued growth. Please turn to Slide 17. In FY 2022, we made excellent progress against the objectives set across our strategic pillars. Beginning with the first strategic pillar where we focus on world-leading GPCR drug discovery. In FY '22, we further enhanced our GPCR and SBDD platform value. We executed a new collaboration with Alphabet's Verily and leverage their AI data sets to already identify multiple new GPCR targets of interest for future drug discovery. We executed a new platform collaboration with U.S. company, Kallyope, to, again, identify novel first-in-class GPCRs for future drug discovery. We achieved 5 milestone events across programs as part of our multi-target collaboration with Genentech. And importantly, we executed 2 major new multi-target collaborations with global pharma partners, and up to USD 1.2 billion agreement with AbbVie in the neurology space and a $700 million agreement with Eli Lilly and co. in the diabetics -- diabetes and metabolic space. As a result of these collaborations and continued progress with existing drug discovery partners, the long-term future of our GPCR pipeline is secure. Please turn to Slide 18. Moving to the second and third strategic pillars. In the area of major cash flow-generating partnerships, we witnessed strong progress. Pfizer committed to invest in its GLP-1 agonist program for type 2 diabetes and obesity, commencing a large Phase IIb clinical trial in the U.S. This generated a $10 million milestone income event to Sosei. Our partner, Neurocrine, rapidly advanced its M4 agonist program for schizophrenia, commencing a Phase II clinical trial in the U.S. This generated a $30 million milestone income event to Sosei upon the IND acceptance. And lastly, our co-owned investment company, Tempero Bio received FDA clearance to commence clinical trials in the U.S. and received $5.3 million grant from NIDA. Now this program targets substance use disorders, an area of huge unmet medical need in the U.S., and together with the team at Tempero Bio, we hope to see this program advance further in 2023. In the area of transforming in-house R&D, the realignment of talent and the new program-centric focus saw us advance selected programs in preparation for first-in-human clinical trials over the next 3 years. And with the support of new strategic collaboration partner, Weatherden, we advanced multiple clinical and preclinical programs, such as both EP4 programs and the GPL52 program, to a position where we expect at least 2 new first-in-human clinical trials to begin in 2023. So thank you for listening, and I'll now hand over to Dr. Matt Barnes, Head of U.K. R&D, to talk in more detail about the GPCR platform and selected clinical programs. Thank you, Matt.

Thank you, Chris. Good afternoon, everyone. My name is Matt Barnes. I'm the President of Heptares and Head of R&D in the U.K. I will present our progress in the R&D area. So please turn to Slide 20. So I would like to start by emphasizing that we remain committed to strengthening our world-leading GPCR platform capabilities. And the world leaders in the pharmaceutical industry continue to choose our platform to prosecute complex GPCRs. Significant progress has been made in this area over the last year or so to support our pre discovery and discovery areas, and build on our core StaR and structure-based drug design technologies. Our latest additions include Cryo-EM and the protein binder toolkit, which will allow us to reach a structural position for more difficult targets more quickly. Also, the addition of DNA-encoded library or DEL screening and GPCR chemogenomic library screening ensure that we continue to identify and deliver better hit compounds more quickly. It is important we continue to strengthen our platform capabilities as this is one reason that the companies listed on the right-hand side, including new multi-target discovery collaborations with AbbVie and Lilly in 2022. They continue to make us the go-to partner of choice in this area. Please go to Slide 21. So in addition to strengthening our platform area, we have been extremely successful in prosecuting more strategic collaborations on choosing the right target. Following our first collaboration with InveniAI in this area in 2021, we have also established 2 key partnerships in 2022. Firstly, in January 2022, we signed a deal with Verily to identify new GPCR drug targets and subsequently generate novel drug candidates in immune-mediated diseases. The research collaboration combines Verily's immune profile capabilities and Sosei Heptares' StaR platform and SBDD capabilities to identify GPCRs expressed in immune cells, enhance our understanding of their functional relevance and prosecute as potential drug targets in immune-mediated diseases. Secondly, in May 2022, we entered into a collaboration with Kallyope to identify and validate novel gastrointestinal GPCR targets for drug discovery. The agreement leverages Sosei Heptares GPCR diversified compound library and GPCR expertise, with Kallyope's gut-brain access platform, which includes an organic -- sorry, an organoid phenotypic screening approach. Novel GPCR drug targets emerging from this collaboration, will provide new opportunities for potential therapeutic intervention in gastrointestinal diseases. Identifying and validating new GPCR drug targets, combined with our core technologies and new molecule identification through internal methods or via collaborations provides huge potential for maintaining a full, healthy and sustainable early pipeline of projects. Please go to Slide 22. So next, I would like to turn our attention to the progress on some of our clinical stage partnerships. This slide summarizes our highly successful collaboration with Neurocrine Biosciences on the novel muscarinic receptor agonists for schizophrenia and other neuropsychiatric disorders. As Chris mentioned earlier, Neurocrine initiated a placebo-controlled Phase II clinical study in the second half of 2022 to investigate NBI-568 formerly HTL 878, the selective M4 agonist as a potential new treatment for schizophrenia. This clinical development milestone triggered a payment of USD 30 million for Sosei Heptares from Neurocrine. NBI-568 represents the most advanced candidate under this multi-program collaboration, but also of note is the intention to initiate Phase I clinical studies on both the dual M1/M4 agonist, now known as NBI-570 and an M1 selective agonist both in 2023. Sosei Heptares is working extremely closely and effectively with Neurocrine on this collaboration, and of note is that Sosei Heptares retains rights to develop all M1 agonists in Japan in all indications. Please turn to Slide 23. Further progress on our other clinical stage partnerships is captured in this next slide, which provides an update on PF-532 now known as [ Danuglipron ] and that's from the Pfizer Q4 2022 results. This is a GLP-1 agonist, which Pfizer presented at the EASD meeting in September last year, and they initiated a large Phase II clinical study in type 2 diabetes and obesity towards the end of 2022, resulting in a clinical development milestone payment of USD 10 million to Sosei Heptares from Pfizer. Please note, this asset was discovered by Pfizer scientists during a research collaboration, in which Pfizer accessed Sosei Heptares' proprietary technology to develop and enable structure-based drug discovery for GPCRs. We remain very encouraged by the data released by Pfizer thus far, highlighting the half-life of the molecule is supportive of once a daily administration and robust dose-dependent declines in mean daily glucose and body weight were observed with once daily 532 consistent with a potential best-in-class small molecule profile against an already well-validated drug target GLP-1. We believe this asset has huge potential in indications such as type 2 diabetes and obesity, which has recently been underpinned by some marketing -- some market opportunity assessments by Pfizer, suggesting that a preference for oral versus injectable, with the view that orals might capture up to 30% of the GLP-1 market by 2032, a market that is projected to reach USD 90 billion by 2030 based on current market growth. Please turn to Slide 24. So in addition to our highly successful collaborations, we have a rich internal portfolio of programs with 3 wholly-owned assets to begin clinical studies within the next 12 months. On the left is our EP4 antagonist for immunosuppression in solid tumors, which is a collaboration with Cancer Research U.K. that Chris mentioned earlier, and I will go into more detail on the next slide. In the middle is our GPR52 agonist program, which is a novel GPCR target, which presents opportunities in schizophrenia and psychosis. Both of these programs are due for clinical start in the first half of this year. Lastly, on the right-hand side is our EP4 agonist program for inflammatory bowel disease. This asset is a highly potent and selective molecule with an oral, but GI-restricted profile, which will be due for clinical start towards the end of 2023. We're really excited about these 3 internal programs as they offer opportunities across our key therapeutic areas of focus. They represent a mix of novel and validated targets, which allows some mitigation of risk and provides a great opportunity for our translational medicine team to demonstrate the best practice approach we strive for. Advancing these internal programs into the clinic will ultimately provide Sosei Heptares with higher value creation. Moving to Slide 25. So on my final slide represents some more detail of our EP4 antagonist program for immunosuppression in solid tumors with Cancer Research UK. We signed this new collaboration with CRUK in August 2022 to advance clinical trials for this promising cancer therapeutic EP4 antagonist. So why did we do this? Well, as you know, cancer is an extremely complex area and expensive area of clinical development. CRUK has the best access to an unrivaled network of world-leading scientists and clinicians in this area with a world-class infrastructure across 20 clinical centers in the U.K., and has a proven track record, having delivered 6 agents as registered medicines alongside world-leading corporate partners to date. In addition, we will share the costs and risks associated with this clinical program, which will be coordinated and managed by CRUK with Sosei Heptares retaining the license to clinical trial results and collaboration IP. CRUK will receive a share of future revenue if the drug is successfully developed, which, we believe, is a real win-win for cancer drug development and cancer patients. So that concludes my section, highlighting our significant progress in the R&D area in 2022. And I will now pass back to Chris, who will highlight our objectives for 2023.

Thank you, Matt. Please turn to Slide 27. So as mentioned in my slides earlier and as summarized on this slide, we executed strongly against the objectives that we set ourselves at the beginning of FY 2022. Regarding strategic growth initiatives, we continue to search and evaluate for opportunities to acquire revenue-generating products and/or companies as well as for late-stage products to in-license for clinical development and future commercialization in Japan. Regarding acquisitions, we remain cautious for specific reasons, namely the quality overseas pharma and biotech company valuations remain high, while the Japanese yen remains weak. As such, we will remain disciplined and not be tempted to do an ill-timed transaction. Regarding in-licensing of late-stage products, this will remain an ongoing process for several years as we seek to rapidly build a pipeline for Japan and APAC. I can confirm that from FY 2022 and into this year FY 2023, we are involved in multiple conversations with counterparties under confidentiality. Please turn to Slide 28. Now turning now to our priority objectives for FY 2023. So across our 4 strategic growth pillars, we as a team committed to the following: we will invest to enhance our world-leading technology and GPCR structure-based drug design capability. We will execute at least one new high-value cash flow-generating collaboration as well as supporting our partners to advance existing partnered programs. We will advance at least 2 new in-house programs into first-in-human clinical trials. And lastly, we will take clear steps to build a Japan pharma unit by in-licensed or in-house products. Please turn to Slide 29. So here are our 4 strategic pillars for growth over the next 3 years, which, if executed well, will position the company strongly for the latter half of this decade. And please turn to Slide 20 -- sorry, Slide 30, our 2030 vision. So I began this presentation with the vision for Sosei Group, which can be neatly summarized as we invest in world-leading science to deliver life-changing medicine. To do this, we need a strong sustainable business. And on this final slide, I want to explain what the 2030 vision looks like for Sosei Group. We will have novel medicines that we help to discover on the market globally via our partners. We will have a disruptive lean commercial business in Japan, delivering in-licensed and ultimately, our in-house discovered products. We'll have a growing pipeline of innovative programs, serving areas of unmet medical need. We'll have rapidly growing sales, cash flows and profits. And we'll be the leading biotech in Japan, driving innovative medicines to patients. This completes the presentation today. Thank you for your time, and we will now take Q&A.

[Interpreted] Chris and Matt, thank you very much, and those of you at this venue and on the web, thank you very much for your attention. Now we would like to move on to Q&A session. [Operator Instructions] The person at the front seat, please.

[Interpreted] Hashiguchi of Daiwa Securities. I have a question on the M&A strategy. Sosei, historically speaking, has had a few large-scale M&A, which has driven your growth over the years. Last year, you were actively looking for M&A target. I think you said that repeatedly. But this time, you showed us this year's target and your medium- to long-term vision. You did not mention M&A in your vision. Is this a change of your corporate strategy? If so, what is the background to that? And what is the impact on Sosei's growth story.

[Interpreted] Thank you for the question. So this is a question to you, Chris. Chris, please?

I did mention acquisitions in the last couple of slides. The way I would describe it is no real change to the strategy. It's just that M&A will potentially support us, execute the strategy faster. As you rightly pointed out, Sosei is a company that has grown traditionally via acquisition. It will continue to be the case going forward. As I mentioned last year, and as I mentioned in my speech just now, over the last few years, the conditions. And by that, I mean, valuations of companies in this sector, combined with the fact that we finance ourselves with yen has made the transaction -- the aspects we don't control of the transaction difficult. And what I said in my speech just now is we remain focused on using M&A as a path to execute our strategy faster, but now we don't want to get dragged into a transaction at a poor time. Hopefully, that answers your question. But in summary, M&A is still very much part of how we will achieve our vision faster.

[Interpreted] Thank you very much. And if I may elaborate. Basically, this is to recap of what Chris said, our strategy remains unchanged. And when we prepared our goal that is showing on the slide, of course, we have internal discussion. M&A, as Mr. Hashiguchi mentioned, it has been functioning as a growth driver. And if you take a look at the situation, we were able to have good acquisitions in the past. But if we need to limit within this year, and if we need to look at whether we are achieving our KPIs, we are not quite sure whether is correct or not. So we were always including that within our goal, but we are now paring down our goals from 6 to 4. And as you can see, we thought that this would not be appropriate as a part of our goals. But our strategy remains unchanged. So this is just a supplementary comment. If you have any questions or comments, please, then the man at the front row, please.

[Interpreted] Jefferies Securities. My name is Miura. I have several questions. The first question is related to TSE Prime transition. And I think you are making efforts to do that. And if you can move on to Page 7 of the slide, in terms of the expenses, TSE Prime listing. You are including that. So by taking a look at this, it seems like there is a higher probability that you would shift to TSE Prime. And am I correct in my understanding. If you are to transition, what will be the timing that you're going to transition?

I'll answer that. We are working on a TSE Prime transfer project. We can't confirm whether or not it will be successful. However, we do think that based on our management of the business for a number of years and our financial performance that we have put ourselves in a good place to potentially transfer. But as I'm sure you will understand, it's not up to us. It's up to the Tokyo Stock Exchange. So we remain confident, and we are hopeful, but we can't sort of -- we can't say definitely that it will happen.

[Interpreted] my second question, also on Page 7, you talked about R&D cost, the expenses, there are 3 bullet points. The bottom one, you said that you will progress the Phase -- the prioritized program to Phase Ib. So on Page 24, you talk about in-house, 3 key products. So those are the ones that will start Phase Ib? Is that what is meant by the third bullet point? So what -- how can I understand the start of Phase Ib. Could you elaborate?

[Interpreted] Thank you very much. So Matt will answer and I will talk about the financial aspect after that. Matt, please?

Yes. Thanks for the question. So of course, Phase Ib -- to get to Phase Ib, you need to do Phase Ia. Those will be the clinical starts that the costs are referring to. So of course, you need to gear up to enable the start of clinical studies. You need to scale of material, you need to do toxicology if you're committed to taking those programs into early clinical studies yourself. So that's what the cost is associated with. It's not a cost for Phase Ib. It's for preparation for Phase Ib. Yes. Does that make sense?

[Interpreted] thank you very much. Any other questions?

[Interpreted] And the third question, I'm sorry, I'm asking you many questions. On Page 14 of the slide, you have the future direction of the Japan business. especially what I noted was the one on the right-hand side to be attractive market for disruptors, it says. And in what kind of respect are you trying to establish Japan business as the disruptor compared with the traditional pharmaceutical companies. How are you going to differentiate yourself? Can you talk about the idea behind this?

[Interpreted] Thank you very much. And then I would like to ask Chris to respond to the question.

Thank you, Nomura-san. I think the best way to describe this is, traditional pharmaceutical companies, both Japanese and international have been built on the premise that you need a very, very large commercial infrastructure to be successful. We don't have a very, very large commercial infrastructure in place. But what we do have is a business that can be built from the ground up. So when I mentioned in my speech, we want to build a business that is lean that does not have a very, very large fixed cost base or very, very large commercial infrastructure, but one which makes the best use of partners, contract sales forces, et cetera. We have the opportunity to build the right-sized business to be profitable and disruptive and agile for the future, and we believe that existing competition will find it very difficult to restructure themselves back into that sort of a sized organization. So we have an opportunity to build a much better model going forward. And I said in my speech, the model that we are looking for would be best described as the model that a U.S. biotech would use in its go-to-market approach as opposed to large-cap pharma. Hopefully, that makes sense.

[Interpreted] Thank you very much. Any other questions? Yes, gentleman in the front row.

[Interpreted] Toyo Keizai, my name is [ Onishi ]. So my first question is, for the Japanese market, so late-stage product will be brought into the Japanese market. I think you've said this from last year or before that. So why could you not bring this in last year or the year before that. So this is the same as the M&A. So what is the bottleneck, if any? And this year, can you realize this without fail. So that's my first question.