Takeda Pharmaceutical Company Limited (4502) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to the conference. My name is Naomi Kumagai, Japan Pharma Analyst, JPMorgan. It's my great pleasure to introduce Christophe Weber, President and CEO of Takeda. After his presentation, we're going to have a Q&A session at Borgia, across the hallway. With that, I'm going to pass it to Christophe.

Thank you. Thank you, and good afternoon. I hope you are still awake. It's a long day for everyone. What I can share with you today is that I am coming quite rare. But I'm coming to the JPMorgan conference with a big smile on my face because of what we have achieved at Takeda, and we are very proud of that. So this is what I want to share with you today. What is Takeda today? How we have been transforming the company over the years? At the same time, 12 months ago, during that week, we were closing the acquisition of Shire. We were celebrating our listing on the New York Stock Exchange. We were having our first top-200 leadership internal conference to kick off the integration. And then 1 year later, we are here. We have made huge progress, and this is what I would like to share with you today. Do read the forward-looking statement, I've been told because now that we are listed on the New York Stock Exchange, I have to say that you have to read the forward-looking statement. There are 3 topics I would like to share with you today. First, who is Takeda? What is Takeda today? Just to step back because we have been transforming so much the company. What I can immediately share with you is that as of today, we are already operating as one company. So the organization has been put together. The integration on the people side, the integration is done. So it's a remarkable, I think, achievement in terms of timing and speed. So we will look at Takeda, our footprint where we are, beyond the fact that our market capitalization doubled, our enterprise value tripled, who are we and what is this company? I think the change has been so radical that it's worthwhile to spend some time on that. Second topic will be on our values and our commitment to ESG, environment, social and governance, and we'll talk about carbon emission and carbon neutrality. Third topics will be about our pipeline, our portfolio, our financial commitment, how are we doing and how we'll -- we are seeing the future. Our mission is very simple. We are a science-driven company. Our goal is to deliver highly innovative medicine to patients worldwide. Today, we have the scale, we have the geographical coverage to achieve that. And so this mission has not changed, but we have -- we are strong enough to deliver this mission over time. So the way we are organized is that we have our global headquarter in Tokyo, and we have built a significant global hub in Boston. For example, in Boston, you will have our Global Oncology Business Unit. You will have our global R&D headquarter. So it's a very significant hub that we have created. We started before the acquisition, but we consolidated our presence in Boston. So Tokyo, Boston, 2 big hub. We do have, also quite a strong presence in Zurich, for example, our Global Manufacturing organization is headquartered in Zurich. And in Singapore -- from Singapore, we are leading our growth in emerging markets region. So we have a huge region with Asia Pacific, Latin America, Middle East, headquarter of this region is in Singapore. So if you look at my team, the Takeda executive team, they are, first, it's a very diverse team. There are 11 nationalities in the Takeda executive team, and my team is spread across mainly Tokyo and Boston, also Zurich and one leader for the growth in emerging markets in Singapore. Our revenues are slightly over $30 billion of revenue, and we have a presence in 80 countries. We have a competitive presence in all the countries where we operate now, which we didn't have before. So we are the leading companies in Japan. We are in the top 10 pharmaceutical company in the U.S. market. We are often in the top 10 in European countries. We have a very significant presence in developing in China, in Russia, in Brazil. So this is Takeda currently. We have concentrated our research organization on 3 research center, 1 in Japan, 2 in the United States. So we have made this really decisive choice to be very focused and to have a very effective and lean infrastructure in terms of research, and we have 36 manufacturing sites across the world. So mainly in Japan, U.S. and Europe. We also have some manufacturing sites in key countries like China, Russia, where it's very important to have this manufacturing presence to be successful in the long term. So that's our current footprint. A bit more than 50,000 employees. Again, as of today, we are operating as one company, one Takeda. We are very proud of that, 50,000 employees. And I think for a company of our size, when you look at our revenue, our presence, is actually a very lean big pharma. I mean many of our competitors have more than 100,000 employees. So I think we have this actually competitive advantage to be -- to remain lean in spite of our size and our presence. And we have -- one very key focus is to be the best employer where we operate. To create the best possible working environment so that we can be very attractive to attract and retain the best talent across the world. So we measure our attractiveness internally and also externally. Our goal is to be the best employer in every country where we operate. And as of today, we have the best employer status in 27 countries. So that's -- this new Takeda, Takeda has been created in 1781, but we are a very new Takeda in a sense because of this scale and geographical presence across the world. So I would like to talk more about our values and about our commitment to ESG. Our values have not changed, and we have actually reinforced our values. And this has been really part of the integration and the creation of this one Takeda. Internally, we spent a huge amount of time to explain and to live these values. We have made a lot of workshop. We do a lot of case studies. This is extremely important. We always do the right thing for the patient. We always reinforce trust with society. We always focus on improving the reputation of the company, and then we develop our business. And you will be amazed that it's a very useful compass to think like that patient, trust, reputation, business. The industry has a reputation, which should be better. Why? Because too often we make mistakes, which are really damaging the trust and the reputation that we have. We really don't want to fall into that trap. And this is how we are training and this how we are living our values at Takeda. Please ask questions if you need. And if you want later, because we have real case studies to exemplify how we live this patient, trust, reputation, business, which is extremely important. And actually, the feedback we are getting from all the employees who have joined Takeda is that they are very proud and very happy to be in a company which is a values-based company like us. ESG is extremely important, and it's actually linked to our values. When you think about trust and the reputation and doing the right thing for the patient. So I will share today with you our commitment to the environment and carbon neutrality. Our social commitment around health and access, of course, to medicine, especially when you have life-saving and life-transforming medicine like us is very critical. Our global CSR programs, which are very developed and talk about our governance. And being a Japanese company, governance is a very important topic for any company, but especially in Japan. We -- here, again, we have -- we look internally about what we do, but there are a lot of external index and benchmark. And I think Takeda has improved its position on many of these index in the last few years. So let's start with the environment. We have been focusing on carbon emission actually for a long time. In the last decade, we have reduced our carbon emission at Takeda by more than 35%. As we stand today, we emit 4.5 million ton of carbon every year. And you will see that actually, the majority of these emissions are coming from our supplier. So within our value chain, we -- our own value chain generates 14% of this 4.5 million ton. 87% of this emission is coming from our supplier. So we know exactly what we emit, we measure that very well. We have all the technology to measure that. We know how to reduce it as well because we have done that in the past. Our commitment is to be carbon neutral by 2040. And to reduce by -- to neutralize our own emissions, Scope 1 and 2 within our own value chain and to reduce by 50%, the emission of our suppliers. And we have a 2025 milestone with a 40% reduction of this 4.5 million and a 15% reduction of Scope 3. So that's very important, and we are extremely committed to do that. We know how to do that. We have all the programs in place. So we have the granularity site-by-site and program by programs to do that and to reduce that carbon emission. We want to go one step further, however. And I think this is quite unique. But we think this is the right thing to do. Again, we are a health care company. Global warming and climate change is impacting health or will impact health and it's already impacting health. So you need to be very serious about it. So we are now -- what we are now committed is to, as soon as 2020, to purchase Verified Carbon Offset, which will put Takeda carbon neutral in 2020. So we will offset this 4.5 million ton of carbon emission by Verified Carbon Offset. We believe that we can do that. There -- we can find this very good, robust, Verified Carbon Offsets. It's a financial commitment that we can do as well without changing our financial target and financial commitment. And that's because we have reduced in the past our carbon emission. So Takeda, our commitment is that Takeda will be carbon neutral in 2020. And that's, we think, is the right thing to do, considering what's going on globally. On the access to medicine front, it's extremely critical, and this is part of our mission, and it's part of our values. It's especially important when you are developing life-saving and life-transforming medicine as we do. And so we are focusing on access to medicine on our most innovative medicine. When it's off-patent, when you have generics, it's less of a problem. The real access issue and the real problem issue is for patented, highly innovative medicine, which are usually expensive. What do we do? First, we are committed to bring this medicine globally to all countries where we operate. We price our medicine based on their value. We are very much, also keen to develop outcome-based contracting and value-based contracting. We have a Tiered pricing model because we think that we have to reflect somehow the wealth of countries and so we have a Tiered pricing model between rich country, developed countries to the poorest countries. And within countries, we have some Patient Assistance Programs of -- on mechanism to help patients when the health care system is not robust enough. So when people don't have a full reimbursement, when out-of-pocket is too high, when there is no reimbursement, and it's a full out-of-pocket market, we have some mechanism to help the patients based on their income and based on their ability to pay to make sure that our most innovative medicine are reaching the patients. So at Takeda, we, of course, track our revenue, we track our market share like everyone, but we do track also our patient coverage. How do we reach the patient in volume in all the countries where we operate? And this is something we have actually initiated a few years ago. We have tested it. It's a model which is working very well, and we will implement this model globally through all our portfolio and pipeline that we'll describe a bit later. And actually, it has been recognized a few years ago, we were at the bottom of Access to Medicine Index, which is existing, which is one of the benchmark of the industry. And we jumped up to the 5th rank. And because they saw this commitment and this focus on access to medicine, which, by the way, is the right thing to do, but it's also the right thing for our business as well. And so we -- it's really important that we are able as a company to grow not only in developed countries but in all the countries where we operate. Our CSR programs are under -- are very much developed. So every year, we commit to programs which are all dedicated to health and global health. And we have actually a quite innovative mechanism, where our employees vote and select which program they would like us to do. And so we have this mechanism that every year, we present a range of programs to our employees and they vote which ones they prefer. And we think it's a very strong way to show and to create a bond between our CSR programs and our employees and to -- for them to really see how we can impact the global health across the world. Our governance, I really believe is one of the strongest and best-in-class. We have a Board with -- 11 out of the 16 directors, are external Independent Directors. The Board meeting is chaired by Independent Directors. We are organized with 3 committees, Nomination Committee, Compensation Committee, Audit and Supervisory Committee, all committees are exclusively comprised and chaired by Independent Director. I think for a company like us, Japanese company, but with the aim to be a global leader in the industry, we ought to have a very, very strong governance. And I think this is what we have assembled and we have done over the years. And we are very happy about that. And I have to say that this Board is extremely important and working very well for a company like us. Let's go closer to our business and pipeline. So I'll start with the pipeline. I won't spend a lot of time on our pipeline because we just did an R&D day, not a long time ago, just before Christmas. So please, if you are interested, go and see the presentation of this R&D day. We are an R&D, a science-driven company. That's how we define ourselves so our long-term future rely on our pipeline and our ability to have a productive R&D engine. We are extremely focused. So in the biopharma area, we focused on 4 therapy areas, oncology, rare disease, neuroscience, gastroenterology. So that has a choice we made actually a long time. I mean 6 years ago, we changed our model, and we said we want to focus on a few therapy areas. So whether you look at our research team, our development teams, are all dedicated to these 4 therapy areas. We are -- sometimes I use the image analogy of being like 4 biotech because we have discovery team dedicated to oncology. It's like an oncology biotech. And we have development team therapy area unit dedicated to oncology. Same in rare disease, neuroscience and GI. So we have the best people, the best team in these areas. And right now, we have seen a huge progress in our ability to bring a pipeline and innovate. We have 12 new molecular entity that we could launch by 2024, which is probably more launch in the next 5 years than in the last 15 years for us. So it's really a step change in terms of pipeline and launch. We have 40 new molecules in clinical stage. We have a huge way of new product launch in China. And we have built up -- over the years, we refinanced some R&D investment a few years ago, and we are really starting to see the result of that. 50% of our pipeline has an orphan drug designation. Why? Because we are extremely selective. We only keep highly innovative medicine. Very diverse pipeline, diverse in terms of modalities, biologic, gene therapy, microbiome, monoclonal antibodies. And we have, we believe, an R&D model, which is very lean and -- because focused and because the way we are organized as well. We have 4,500 employees in our R&D organization. And with a very lean infrastructure. So actually, the majority of our R&D budget can be dedicated to the pipeline instead of paying for your lab, your infrastructure. We have a very good ratio, very competitive ratio compared to the rest of the industry. And that's also because we are partnering a lot. We have about 200 partnership ongoing. Many of these partnerships are on the early-stage research stage, platform stage. But it allows us to have access to innovation, to risk share to have access to platform that we don't have usually access to. And we have -- we are very agnostic in terms of the partnership model. Sometimes, it's a research collaboration. Sometimes, we create a new company. Sometimes we invest in an existing company. We have any type of partnership provided that it's a win-win for us and the partner. So that's where I won't spend too much time, but you can see here that we have a midterm pipeline with 12 new products that we will launch in the next 5 years. Will have what we call a wave 2 of programs in the year beyond. And we have invested in platforms, which we think will really drive our R&D engine in the years to come in cell therapy, innate immune modulation, gene therapy. And so we are not forgetting the early stage because we know that that will drive our success in the decades to come. We are convinced that if you look at the wave 1 pipeline, so the 12 new products that we launch in the next 5 years, we believe that we can generate more than $10 billion of revenue in peak with this wave 1 asset, it's important because I will come back to that a bit later when I will talk about our growth outlook for the company. Our portfolio of business is focused on 5 business areas. You find back the 4 therapy area I just mentioned. GI, rare disease, oncology, neuroscience. So that's pretty -- very much fully aligned with our R&D focus. And then you have the plasma-derived therapy business, which is slightly different, which represents a significant part of our business. So that's our focus. That's -- we focus on that. All our investment, promotional investment is focused on these 5 businesses. And among these 5 businesses, we have 14 growing global brand. The one with the red tick, these are products, these are growth drivers for the mid-, long-term. These are global products that we will launch everywhere because we think that they are extremely well positioned, extremely competitive, and that will grow our future. So when we combine these portfolio, these 5 businesses, these 14 growing global brand, and we combine that with the pipeline that I just shared with you, we are convinced that we'll be able to grow in the future, both in the midterm and long-term. And we have enough growth engine to offset some headwinds, whether they are patent expiry, whether they are competitive headwinds in some area like hemophilia, for example. So this is extremely important because we have what it takes to grow in the future. And we just need to invest in this R&D pipeline and launch effectively this new product. That top line growth, combined with our cost synergies and our ability to really gain cost synergies because of the integration of the 2 company, that will bring us to a level of very competitive margin. Our target is mid-30s, core operating profit margin. Actually, in H1 2019, we were already at this level, so we are very comfortable with this target. So we'll have best-in-class margin, I think, in the industry, because you look at this top line growth combined with these cost synergies, and we see a lot of synergies when you integrate 2 companies like we do. So that will generate strong cash flow, and our commitment is to deleverage rapidly. We have a level of debt today, which is 3.9x EBITDA. We already reduced, actually, in 6 months from 4.7 to 3.9. We are doing some divestment to accelerate this deleveraging. And our commitment is to be at a 2x level, 2x net debt-to-EBITDA level within 3 to 5 years, so by March 2022 to March 2024. So we are very committed to that, but -- we know we will achieve that when you look at our growth pattern and our margin profile that we have. Our capital allocation is very simple. We deleverage, we invest in R&D, and we focus on shareholder return. And the dividend is a significant part of it with JPY 180 per share of dividend. So I hope you get a better feel about what -- who is Takeda today, very different company, much more powerful, a very strong outlook for the future, values-based, very patient-centric, committed to ESG. And I think today, we are making a big step by commitment -- by committing to carbon neutrality this year in 2020. And we have a growth outlook because of our portfolio pipeline, which will allow us to have best-in-class margin and to look to the future with a great optimism, and we are really looking forward to it. Thank you very much.

All right. Let's get started. Before the start of Q&A, would you able to introduce yourself, just quickly, please?

Sorry. Yes.

Would you be able to introduce yourself?

Okay. Okay. So I am Christophe, the CEO of Takeda; Andy Plump, Head of R&D, Costa, CFO; Julie Kim, heading our Plasma-Derived Therapy division; and Teresa, leading our Global Oncology business unit. We also have a -- [ we don't have in this room ] but we have our Head of U.S. business, Japan. So -- it's working? It's working or I need to press or -- all right. Okay, okay. Could you listen -- could you hear what I said? Oh, yes, yes. All right.

With that let me start with a quick question on ENTYVIO subQ formulation. So could you explain what happened with [ CRN ] and how long it's going to take to resolve the issue?

Andy, do you want to take that? First quick question, quick answer, which is that we're going to -- we haven't really disclosed the content of the complete response letter that came in last month. We're still sorting through that. The good news is that it wasn't related to the clinical trials, it's not related to the efficacy. There's 0 spillover to the IV program, but we'll have a bit more to share -- bit more -- a few more details to share at the 3Q earnings announcement that's coming up in a few weeks.

Financially, there's no impact. It's not a material event financially, both for the short-term and long-term actually. But we are, of course, committed to launch this subcu in the future.

Any questions from the floor?

Over there. Yes?

I have a question about your pipeline TAK-671. It's a significant pipeline in the eyes of Koreans, perhaps because it's a first noble drug, Samsung Bioepsis will be developing and putting out to the market. You are co-developing with Samsung Bioepsis and I wonder how that collaboration is coming out?

So thank you for the question. It's an interesting one to start off. The TAK-671 is a very early-staged asset. This is a fusion protein, an FC-ulinastatin fusion protein that we had developed initially within Takeda, we had discovered within Takeda. And the intent was to develop this in patients with pancreatitis, for which there are no therapeutic treatments, quite a challenging program. We were actually looking for partner -- shared risk partners. And at the time, Samsung Bioepsis looking to expand their capabilities from biosimilars to bionovels. And as we put together quite a creative partnership where we actually gave Samsung Bioepis the program to prosecute on their own if they were to achieve proof of concept, we bring that back into Takeda for late-stage development and then long-term milestones and royalties back to Samsung Bioepis. It's a tough program still in early development. So no clinical updates at this time.

Any question? Let me ask one more question in ENTYVIO. The one SubQ approved, how should we see the change in market dynamics? For example, how much IV population is going to be switched?

Yes. I think -- so first, ENTYVIO is -- has a remarkable success. It's growing at a rate higher than 30% on a year-on-year basis. And it is really becoming the standard of care in IBD because of its efficacy and safety profile. And so we -- the data we have generated on ENTYVIO is really fantastic. And that's why, of course, the SubQ will be very useful for patient who don't want to go through intravenous administration. But on the other hand, there is no equivalent to ENTYVIO when you look at efficacy and safety profile today in the IBD market, and so I think that that's really the dynamic out there. And the growth is very much coming from bionaive patient, so patients who are starting a treatment with a biological product. And as you might know, we have also shown superior efficacy against adalimumab. So against TNF-alpha in a head to head trial, which has never been done before in IBD. So the SubQ is, of course, more convenient than IV, but the most important is the efficacy safety profile of the product.

When are we going to hear something on TAK-169? I think its Phase I started around now.

Yes. So the Phase I program has begun. It's a partnered program with one of our early oncology partnerships. It's a CD38 antibody that has a special payload, it's an ADC, antibody-drug conjugate. It's in early development. It's -- when we have data, you'll hear about it. It's in a dose -- it's in dose escalation right now. I think this is an example of one of our exciting early programs where it's hard to know when you -- we can actually present it because Phase I programs go at the -- at their own pace. And it depends on tolerability, safety and then whether we're in the right population. So -- but over the next couple of years, we should have something hopefully within the front end of that.

Any question? Go ahead.

Could you update us on your asset divestiture program, timing of further asset sales, how much progress you've made on this billion-dollar goal and what assets are we still considering beyond BOR?

Great. Thanks for the question. So year-to-date in quarter 2 -- so year-to-date, we've announced approximately 55% of the USD 10 billion target of divestitures. And the rest of the 45%, we're targeting -- we're in negotiations. So we're very, very confident that we'll deliver the $10 billion target. The assets that we're divesting still fit in the category that we talked about, noncore assets. And they're the ones outside of the 4 key business areas that Christophe presented earlier on today.

I have a question. Let me ask a quick question on cost synergy target. Where do we stand versus your $2 billion target?

Great. Thanks for the question. So we committed to USD 2 billion of synergy savings in 3 years. We're very encouraged with the way we're tracking thus far. In fact, what we've seen is an acceleration of our integration. So we have 90 -- over 94%. In quarter 2, we announced 94% of the organization had been completed. And in quarter 3, in a few weeks' time, we'll present the update there. So from an integration standpoint on people, organization, we're tracking faster than expected. From a real estate portfolio perspective, we've identified over 85% of the future state, and that's increasing in quarter 3, and I'll update you then. And so from -- also from a vendor consolidation where Legacy Shire, Legacy Takeda, we had a number of duplicate vendors, and we accelerated the communication and updated the contracts there. And so from like -- from all these different activities we've done, we've definitely accelerated the synergy target. And as a result, we've increased our guidance. So originally, we came out with guidance of margins in mid-20s. More recently, we've upgraded our margin target to high 20% margin. Just to reflect, when we started the fiscal year, our margin was 22%, and already in first half of this year, it's jumped to 32%. So we're really tracking in the right direction to hitting the mid-30 margin, so we're very encouraged with that. The total $2 billion hasn't changed, the how fast we get there has. So originally, when we committed to the $2 billion, we said around 70% will be delivered in 2 years. Now we're seeing 80% to be delivered in the first 2 years.

So if you think about the operating margin, how do you currently and using AI to drive efficiencies in R&D.

In R&D, it's -- I can talk about maybe in the financial and shared service centers first, and then I'll hand it over to Andy. So one area that we're looking at really improving is our shared service centers and using robotics and AI. So we're -- firstly, we've consolidated the footprint of our shared service centers. So Legacy Shire had shared service centers in Exton and Dublin, and Takeda had shared service centers in Deerfield and Lodz in Poland, we're consolidating them. And we're actually accelerating the use of robotics and AI. And as a result, we're seeing significant efficiencies in -- predominantly in the G&A space. So we're looking at completely driving more efficiencies in G&A. But from an AI and -- I'll hand over to Andy for the R&D part of the question.

Yes. We were deeply committed to building out a digital and data science strategy to enable therapeutic discovery in all parts of our value chain. In research, we're using -- and of course, AI specifically, you need to have well-annotated, very large data sets. So it tends to work better where you have lots of information. In research, we're using AI in certain partnerships to identify in silico molecules to targets. In our CMC, Pharm Sci manufacturing, we're using AI to optimize process. In particular, in our cell therapy capabilities, we're creating an iterative AI capability to optimize process. In Development, we're using AI to enable clinical trial enrollment. So really, all throughout our value chain. We actually have a group that's quite unique in the industry. It's a group that's called our Data Sciences Institute, which contains in one organization, all of our quantitative sciences for more traditional pharmaceutical quantitative sciences like biostatistics, all the way to data architecture, large data analytics and artificial intelligence. Christophe, you might want to mention that the MIT...

I mean we are embracing AI across our entire value chain. We are also seeing a lot of application right now already operationally in manufacturing, for example, and so we can really increase our productivity across the value chain. And we just also signed a collaboration of partnership with MIT in Boston to together solve problems using AI. So we are really investing on that.

Go ahead.

How has the hemophilia business done relative to your expectations [when you underwrote] the entire deal? Sort of what's your -- what are your thoughts on that landscape for that right now, given that you're over a year into the launch for inhibitor patients tied to the market share?

So we -- as far as we see, it's -- the competitive pressure that we had in mind is happening as we had planned. So no bad surprise, and that's reassuring. And what is interesting is that we are seeing the market dynamic is quite different by country. So the market dynamic is -- in the United States is very different from the market dynamic in Germany and other countries. So it's still early stage, but we -- on the revenue side, we knew that we will have some competitive pressure, and it's happening as we had in mind. So I think -- that's important, I think. And I think long term, we do anticipate gene therapy. It's difficult to predict what would be the impact of the gene therapy. But we do anticipate that they will come and enter. And so that's clear as well.

Question for Julie. In a [indiscernible] business in [indiscernible]. Can you talk about where you make the investments and what kind of return on [indiscernible]?

Sure. So we shared in November at our Investor Day is that we are targeting 65% growth in the coming 5 years from both plasma collection and manufacturing capacity standpoint. So strong growth from a volume perspective. And the other area of investment is also within R&D. So this is an area that historically has been underinvested in the past, and we now have a dedicated R&D group and fund to support that innovation, while still leveraging the support from the broader R&D group.

Also [indiscernible] the money [indiscernible].

So far.

Yes, because the large investment we have made in the past and so we are leveraging that. So when the large investments are especially manufacturing capacity you are talking about billions of investment that were done. So we are investing, but it's -- we're not talking about billions. We are talking about strategically increasing our collection, optimizing our manufacturing. More importantly, having someone like Julie actually to have an end-to-end view about the business. And we are starting to see already the result when you look at our growth rate on the quarter-by-quarter basis, it's already starting to -- we are starting to see the results already.

Just to add, just to clarify one comment here. Since the acquisition of Shire, we've bought 23 collection centers. And we're committed to double-digit growth in that collection center space. So there hasn't been one proposal that Julie's put on my tab with increase [indiscernible] that we haven't approved. Because we acknowledge we're playing catch up, and so it's how fast we can drive for that collection.

I just, first of all, want to thank you guys for your dedication to Alzheimer's. I'm a personal caregiver. And as Bill Gates said, "We can't continue to put this down [indiscernible]." And my question to you is, do you think AI can actually play a role in Alzheimer's? And the second question, would you want to collaborate? I work with a small start-up biotech company with proof of concept [indiscernible]. I'm pressing along with my colleagues [ what we got to get through ]. It's going to take a village as the old African proverb says. You go fast alone but you go farther together. And my question to and your team, would you be willing to collaborate and partner because the disease is such a huge [indiscernible] globally [indiscernible]?

It's a priority to us, and we are open to collaboration in this space, no doubt, yes. AI -- about AI and helping -- AI helping, [ for example, that ] I don't know. I hope but I'm not sure, no, not an expert enough.

Let me ask a quick question on VELCADE. Can you give us some update on what's the generic status? And what should the -- with that, what should we anticipate the 2020 earnings guidance?

So the current situation is that we have limited competition, generic competition today because there is one product, which is not suitable, and it has only an IV formulation. And 90% of the VELCADE volume is SubQ actually for safety reason, not just for convenience. So at the moment, we don't see a huge impact. And our VELCADE's revenue is declining because of Europe generics, because of price pressure, but not because of generic substitution. We'll update you and -- when we do our Q4 guidance, we'll update you about how we see the generic landscape evolving. It's -- we are monitoring the situation. And it's not clear that the situation will evolve so much, but it might. So watch this space. And in Q4, we'll give -- we'd give our best possible guidance on that, yes.

Any other question?

My question is on the oncology business. There are a few broad areas that [indiscernible] can you talk about how well [indiscernible] in the process that you have to [indiscernible] to offset things that are going down, [ possibly moving up ]?

So NINLARO continues to grow at a strong rate year-over-year. And I think it really speaks to the fact that there is a huge unmet need. When you look at the multiple myeloma patients that are mostly elderly and frail to have an agent that's tolerable and to have one that is oral, there is definitely a need and that product continues to grow. We will be announcing soon or publishing data on maintenance for patients that can't take a transplant. So NINLARO continues to do very well. We see the same thing overseas with ADCETRIS in terms of the growth of that product as we continue to get new access in PTCL, et cetera. So that's doing very well. ALUNBRIG, we have our second line. We're on the marketplace there. We are post crizotinib. And of course, that patient population is diminishing. But we will be filing soon for the first line indication, where we have very strong data in terms of overall efficacy, in terms of the impact for patients that have CNS metastases, so we're excited about that data as well. And then when we look at the pipeline, the near-term pipeline, we have 2 relatively near-term launches for products that are in really high unmet areas of need. With pevonedistat for high-risk myelodysplastic syndrome as well as TAK-788 for EGFR patients that have an Exon 20 mutation. And for those patients, there's nothing today. And we've got some compelling data there that I think holds a lot of promise as we look forward.

[indiscernible]?

I'm sorry?

[indiscernible]?

Actually, what I can tell you is that there is so much unmet need in oncology that I think the -- to me, oncology is a race, not against competition, but for the patients. And so it's continuing to make sure that we drive harder, that access is there across the globe as well as making sure that we move really quickly on the upcoming launches so that patients that are really in need get those agents.

Another question. So final question to Andy, maybe, can you remind us of the -- what's the key data points in 2020?

So the next key readout will be TAK-721, which is the first of the 12 Wave 1 assets that -- medicines that Christophe mentioned earlier that we expect to launch in the next 4 to 5 years. We actually just had a readout from the maintenance portion of our Phase III pivotal study, so we're evaluating those data now. We should have data to present and ultimately to file in the relatively near future. Teresa mentioned 2 of the programs, TAK-788, where we expect to see data in the mid- to second half of 2020. We also actually have data from the Phase II study from pevonedistat in high-risk myelodysplastic syndrome that will be presented at some point this year. We have -- we'll have continued rollout of dengue data, extended dengue data. And then there are a number of programs we will have proof-of-concept indications. One example will be our very exciting orexin program. We presented very compelling data in type 1 narcolepsy and in sleep-deprived, healthy volunteers, not a patient population but a proof of principle for a whole series of potential disorders. And then this calendar year, we expect to see data rolling out in type 2 narcolepsy in obstructive sleep apnea and then in additional indications. We also have efficacy in our -- with our oral -- our first oral agent, TAK-994, which will be coming out probably in the second half of this year.

Any final question? If no, we're going to wrap up the session. Thank you.