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

Good day, everyone, and welcome to the conference call of Takeda Pharmaceutical Company Limited. The conference call today is held based on presentation materials available at the company's website, and may we suggest that you visit the website to see the presentation materials on the screen if you don't yet have printed copies to hand. Good day, everyone, and welcome to the conference call of Takeda Pharmaceutical Company Limited. [Operator Instructions] Now we start the conference. Mr. O'Reilly, please go ahead.

Hello. Good morning, good afternoon and good evening. My name is Christopher O'Reilly, Global Head of Investor Relations at Takeda. Thank you for joining us today for Takeda's Wave 1 Pipeline Market Opportunity Call Part 2, which is a follow-on from the Part 1 event we did in December of last year. Before we start, I'd like to remind everyone that we will be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause our actual results to differ materially are discussed in the most recent Form 20-F and our other SEC filings. Please also refer to the important notice on Page 2 of today's presentation. So today, we have a full agenda, including updates on the overall pipeline from Andy Plump, our President of R&D; and also an overview of our commercial focus from Uthra Sundaram, Executive Vice President of Global Product and Launch Strategy. And in between those 2 sessions, we will have some deep dive presentations from our R&D and commercial leaders for maribavir, soticlestat and our Orexin franchise, 3 of the innovative programs from Takeda's Wave 1 pipeline. So without any further delay, I'd like to hand over to our President and CEO, Christophe Weber, for opening remarks.

Thank you, Chris. Good evening, good morning, everyone. Thank you very much for taking the time to discuss with us some molecules in our pipeline. We have already shared with you that we believe that 2021 will be an inflection year for our pipeline progression, and we are confirming that. And I hope that you will be very much excited by what you will see today about the molecule that we will share with you. It will be an inflection year because we are planning to have up to 6 new molecular entity submission, up to 4 approvals. We have 7 more NMEs in pivotal studies across an indication. And we are -- we have a very strong also preparation for launch. I mean, we are about to launch 12 new products in the next 4 years. So it's a very exciting time for us. And actually, today, what we want to share with you is that we are increasing our R&D investment. And in fact, we have been waiting for a long time for that to happen. It's just a reflection of our pipeline, our pipeline progression. So we have delivered the synergies that we had planned to deliver linked to the integration of Shire, but now we see the pipeline progressing so much that it is time to increase our R&D investment. And we are increasing our R&D investment to JPY 500 billion to JPY 500 billion (sic) [ JPY 500 billion to JPY 550 billion ] in '21. So it's quite the significant increase, but that's really the right investment for us because we have this goal of JPY 5 trillion in 2030, so the pipeline of today is our JPY 5 trillion of tomorrow. So we are very excited about this R&D investment increase. I just want to say that in the future here, our incremental R&D investment will be at a lower pace than what you will see today. But today, again, is linked to the fact that 2021 is an inflection year. So a very exciting time. Without further ado, I would like to ask Andy Plump to introduce the day today. Thank you.

And hello, everybody. Chris, if we can please go to the next slide. Next slide, please, Slide 6. So remind everybody that Takeda is a patient- and science-focused organization. What is our R&D strategy? Our R&D strategy is to raise a very high innovation bar. We pursue meaningful, transformative therapies for patients. The majority of our R&D investment is in our innovative biopharmaceutical area, which is comprised of 4 core therapeutic areas: Oncology, rare genetics and hematology, neuroscience and gastroenterology. Over the past several years, we've been building deep and foundational capabilities to support our therapeutic area strategy, and I'll call out 3 of them today: Cell therapy, gene therapy and a capability that cuts across everything we do in data and digital sciences. If we can go to the next, Slide 7, please. Let's step back and talk about foundationally what makes our R&D organization so strong. And that's our research organization. Our innovation in research follows a unique model, a very strong, outstanding internal discovery and pharmaceutical scientists laboratory, coupled with a rich network of external partnerships. Shown here are our 4 research centers, 3 that you've heard about before located in innovation centers across the world: Here where I am in Cambridge, Massachusetts; in Shonan, Japan as part of a growing innovation center known as iPark; and a new laboratory that we opened just a couple of years ago in San Diego. And as many of you may not know, with our Shire acquisition, we brought in a fourth site in Vienna. This site focuses on gene therapy and plasma-derived therapies. We have the ability through these laboratories to innovate on our own. And you'll see that today in 2 of our molecules, with soticlestat and TAK-994 in our Orexin program. If you go to the next slide, please, Chris. Our model is not just about innovating on our own. Our model is innovating in whatever way makes most sense for patients. And we have an inverted model, where our research laboratories and our sciences are incentivized and driven as much to work through partnerships as they are to work through their own internal research. Shown here are examples of the kinds of partnerships that we put in place over the past several years. Our sweet spot for partnering is in research, and it's around platform-based partnerships that have the potential to not only deliver one but multiple programs if that platform ends up working. A great example of that is a partnership that we just signed over the past year with a company known as PeptiDream, where we're leveraging peptides conjugated to therapeutics such as oligonucleotides to target specifically diseases of muscle. We're also, where it makes sense, investing in development. It's not our -- core to our model. Our core to our model is building foundational in research, but where it makes sense to our therapeutic strategy, we'll also make investments in the development phase. And you saw another great example of that last year with Arrowhead, where we're now partnering around TAK-999. We're making continued investments, and we will continue to make these investments over the coming years. And in fact, since the Shire acquisition, we've invested over $1 billion in these research and early development-type partnerships, and it's working. It's working. We saw that -- you saw that just recently with our decision to acquire Maverick, which is an oncology company, a bispecific company, as part of our immuno-oncology strategy targeting solid tumors. We made the decision to opt-in and acquire Maverick and now to bring them in-house. And we have our first molecule, TAK-186, in the pipeline; and a second that we expect later this year. And importantly, as you'll see on the right, we've now completely diversified the modality mix of our research portfolio. We used to be almost exclusively a small molecule chemistry company. Today, we're a therapeutic area-focused company using whatever modality it takes to serve the needs of patients. If we can go to the next slide, please, Chris. So this is our pipeline. Our pipeline is dynamic, it's exciting, and it's poised to deliver both in the near and long term. We make decisions. We're courageous. Actually just showing you a pipeline visual that's defined by anticipated timing for delivery, that's a really courageous move. We're also agile and quick in making decisions in a science and strategy-driven way. With that said, we've had multiple programs come in and multiple programs leave our pipeline since we last spoke. Three that have come in are 2 of the COVID vaccines focusing in Asia and Japan, as you'll see on the left; and TAK-186, the first of our molecules from the COBRA platform at Maverick. Leading our portfolio, as you heard last week from the news of the ITAC study, is the CoVIg, I-G, hyperimmune serum. Also leaving our portfolio are the 2 wave ASOs, antisense oligonucleotides, for Huntington's disease; and TAK-169, which is our partnered program with Molecular Templates. I'll make one other comment about the portfolio. And that said, as many of you know, we have submitted and had the file accepted for Eohilia, which is our Wave 1 asset with a breakthrough designation for eosinophilic esophagitis. We are in active discussions with FDA regarding the potential approval of Eohilia. And then finally, I'll mention today, you'll have a chance to dive deep into 3 of our programs: Maribavir, soticlestat and Orexin. And I think you'll be quite excited about the data and strategies that we'll share. Next slide, please, Chris. Our pipeline is poised to deliver now. We now have 11 new molecular entities in Wave 1, plus the 2 COVID vaccines that I mentioned. We have almost 30 highly innovative molecules in Wave 2. And beyond that, we have a research organization that will deliver sustainably. We're also focused on ensuring that our medicines have a global reach. In China, for example, we expect by the end of our Wave 1 period, which is by the end of 2024, to have 15 of our exciting global brands and new molecular entities on the market. And the next slide, please. Our aspiration is to deliver concurrently our medicines to our 4 major regions: U.S., China, Japan and Europe. That's not always practical, but that's what we strive for. And this is an example of our aspiration for delivering our Wave 1 medicines to the emerging markets. And with that said, if we can go to the next slide, please, Chris. It's my pleasure to hand this off now to Obi Umeh, who'll talk about the talk about TAK-620, or maribavir, program. Obi?

Thank you, Andy. Good morning. I'm Obi Umeh, Global Program Leader for maribavir at Takeda. I've been with this program since 2016 when the Phase III studies were initiated. Next slide, Slide 13. So let's take a closer look at the situation at hand. Transplants are highly limited, precious, life-saving procedures which offer patients a second chance at life. Cytomegalovirus is a common virus belonging to the family of herpesvirus, just like the chicken pox virus. It usually lies dormant in most of the general population, but can cause devastating infections in immunosuppressed transplant patients. Maribavir, a new, differentiated oral anti-CMV agent, has the potential to be a game-changer in the management of post-transplant CMV infection. Presently, Takeda is pursuing global regulatory filings with the goal of providing maribavir to patients in the near future. Next slide, Slide 14. So let's start at the beginning. What happens when a patient receives a transplant? Transplant recipients are put on powerful immunosuppressant drugs to prevent rejection. While immunosuppression is necessary to ensure transplant success, it often introduces a variety of new clinical challenges, including an increased risk of post-transplant CMV infection. You might ask, what does CMV infection mean for the transplant patient? Next slide, Slide 15. Left untreated, CMV infection can affect the body virtually from head to toe, invading multiple vital organs and putting the transplant as well as the patient at risk. When present, post-transplant infection more than doubles the risk of transplant loss, mortality and the total cost of transplantation compared to transplant patients without CMV infection. Next slide, Slide 16. Now imagine a transplant physician taking care of a transplant patient -- one slide backwards, please, taking care of a transplant patient with CMV infection are facing some critical choices. Should they decrease immunosuppression so the body can fight off CMV, but then risk losing the transplant? Or should they adequately immunosuppress the patient to prevent rejection, relying on available therapies to clear any CMV infection that develops? [ The latter ] would seem to be a reasonable course of action, but therein lies the problem. There are no approved treatments for post-transplant CMV infection. The available agents today are suboptimal, and their use can lead to serious complications, such as neutropenia, which is a severe decrease in an important component of the white blood cells. The use of these agents may also cause acute kidney injury. Now what transplant care teams are left with is a position where they're forced to make risky compromises. Therefore, a clear unmet need remains for a new anti-CMV therapy that offers strong efficacy without these difficult and risky trade-offs. Next slide, Slide 17, which is where the potential for maribavir comes in. Maribavir is an exciting new oral anti-CMV agent with a novel multi-model mechanism of action and an improved safety profile compared to currently available agents. Now there's a lot of information on this slide, but here are the most important things to focus on. On the left-hand side of the slide is a schematic of the viral life cycle showing various points at which anti-CMV drugs work. The blue box represents currently available therapies, while the red box represents maribavir. All existing anti-CMV therapies target the virus at UL54, a specific location on the viral genome controlling viral DNA replication. Maribavir is the only antiviral agent that, in addition, also targets CMV at UL97, a different location on the viral genome associated with viral growth. Due to this unique and multimodal mechanism of action, maribavir is able to treat CMV infections resistant to currently available therapies. Now if you take this enhanced efficacy together and combine it with the improved safety profile, maribavir has the potential to redefine success in the management of patients with post-transplant CMV infection. Next slide, Slide 18. Now this slide shows a time line of key milestones in the development of maribavir for treatment of post-transplant CMV infection. The key takeaways from this slide include the orphan drug designation in the U.S. and EU that maribavir has, the breadth of clinical trials supporting the development program and the U.S. FDA breakthrough therapy designation status granted maribavir in 2017. Now we've had a development lifespan over a decade for these products, and by so doing, we have built a strong safety database with more than 1,500 patients treated to date in clinical trials across a range of doses. About 1/3 of these patients have received maribavir at a dose of 400 milligrams BID or higher for up to 24 weeks. I am going to tell you later that the Phase III dose was 400 milligrams at BID. So this went from 400 to 1,200 milligrams BID up to 24 weeks. So let's now discuss where we are today with the development program. Next slide, Slide 19. We recently presented positive data from our Phase III SOLSTICE trial comparing the efficacy and safety of maribavir to conventional therapies after 8 weeks of treatment in transplant patients with refractory/resistant CMV infection. I'd like you to focus on the primary and secondary endpoints seen in red at the bottom of the slide. CMV viremia refers to the active multiplication of CMV virus in the blood. The primary endpoint for this trial, confirmed viremia clearance, is a validated surrogate marker for mortality in this indication and is directly related to the best patient outcomes. A key secondary endpoint assess the durability of treatment effect, looking at both clearance of CMV viremia seen at the primary endpoint and associated symptom control, but this time, maintained through study week 16, a full 8 weeks after treatment had ended. Next slide, Slide 20. Now let's take a look at some of the key highlights of the study population from this trial. This was the largest registration trial conducted in patients with post-transplant CMV infection. The study population included adequate numbers of both solid organ and stem cell transplant recipients, and by so doing, was fully representative of the real-world population of transplant recipients infected with resistant/refractory CMV. Our trial data confirmed a high unmet need associated with resistance to currently available anti-CMV therapies. In fact, over half of all patients in this study had drug-resistant CMV at study entry. Additionally, maribavir was better tolerated than the comparators with over twice as many maribavir patients completing 8 weeks of therapy compared to conventional antiviral therapies. Next slide, Slide 21. What is most important about the data on this slide is that maribavir achieved its primary endpoint, demonstrating highly statistically significant as well as clinically meaningful superiority in CMV viremia clearance compared to conventional therapies. More than twice as many maribavir-treated patients, seen in the red bar on the slide, achieved confirmed CMV viremia clearance after 8 weeks of treatments when compared to conventional antiviral therapies. Now this strong efficacy benefit was consistent across both solid organ and stem cell transplants, among patients with drug-resistant CMV and in a subset of patients with CMV symptoms at study entry. Next slide, Slide 21. Impressively, maribavir, also shown in the red bar on this slide, met its key secondary endpoint, maintaining superior CMV viremia clearance and associated symptom control all the way through week 16, 8 weeks after treatment had ended. Next slide, Slide 23. But the benefits of maribavir go well beyond the superior efficacy and include an improved safety profile. In addition to this impressive efficacy results, maribavir was also well tolerated by patients with significantly lower rates of neutropenia and acute kidney injury, highlighted in the red box of the slide. These important toxicities frequently seen with conventional therapies are a common cause of premature discontinuation of therapy, which often leads to CMV treatment failure. However, in addition to predisposing to CMV treatment failure, both neutropenia and acute kidney injury have been shown to be independent risk factors for mortality in this patient population. Having said that, it's important to note that in patients receiving maribavir, the most commonly reported adverse event was a transient taste disturbance that was mostly mild and did not lead to premature discontinuation of treatment. Next slide, Slide 24. Data from maribavir's Phase II studies can add to the body of evidence supporting its efficacy and safety in the treatment of CMV infections. This slide shows the results of one of the Phase II studies published in the New England Journal of Medicine in 2019 in evaluating maribavir in the treatment of first-line CMV infection. The positive data from this study demonstrates the potential of maribavir in a first-line transplant CMV infection setting. These results inform our ongoing Phase III AURORA trial evaluating maribavir as a first-line treatment for CMV infection in hematopoietic stem cell transplant recipients. Next slide, Slide 25. With the efficacy and safety of maribavir shown to date, we strongly believe in the potential of maribavir beyond the resistant/refractory post-transplant population. The Phase III AURORA trial shown on this slide builds on the successful data from the New England Journal of Medicine Publication, continuing the investigation of maribavir's efficacy and safety in treatment of first-line post-transplant CMV infection, this time in hematopoietic stem cell transplant recipients. The study design and endpoints of this Phase III AURORA trial closely mirror the design of the positive SOLSTICE trial, and we are expecting results to have approval for this study in financial year 2022. Next slide, Slide 26. So here's what I want you to walk away with today. Number one. Transplants are limited in supply. They provide a second chance at life. And thus, they are extremely precious to patients and society. Number two. CMV infection is a serious complication of transplantation that threatens the survival of the transplant and, in severe cases, the patient. Number three. Current management of CMV is suboptimal and is associated with difficult and risky trade-offs. Finally, maribavir has the potential to be a game-changer in the management of post-transplant CMV infection due to its novel multimodal mechanism of action, its improved safety profile, its oral bioavailability, its strong clinical data across a broad spectrum of patients and its potential to minimize or eliminate the difficult and risky trade-offs associated with the use of current agents. Thank you for your time today. I'm now going to hand it over to Claus.

Thank you, Obi. Are you okay? So I always get inspired when I hear Obi talk about what maribavir potentially can do for a patient who has gone through a transplant. And for the next 10 minutes or so, I'm going to take us through our view on what we think that the commercial opportunity will look like. I will touch on the value that we believe maribavir brings, the size of the market and the adoption rate that we think that is likely to be seen. If you can go to the next slide, please. Just before we go into the numbers, let's refresh our understanding of who these patients are and what this is all about. These patients have likely have had years of health challenges. They probably have had good news and bad news. It was probably really a day of bad news when they were told that they were in need of a transplant. The day when they were told that they were now a transplant patient was probably a good day because it gave them a second chance of life. And these patients all tell the same story, that they are extremely appreciative of that opportunity. They're very much aware of the chance that they've been given and they treasure that very much. When we think about the value that maribavir can bring, it's really about making sure that those patients have the best chance of a successful transplant procedure, and the value of the medicine comes from that. If you can go to the next slide, please. Now let's move from the individual focus to a little bit more of an aggregate level. Now this is a very precious procedure to go through, and yet, there's almost 200,000 procedures on an annual basis, 60,000 of those being in the U.S. Very unfortunately, 1/4 of these patients experience a CMV infection, and it actually puts the successful outcome at risk. You can see here at the bottom what it means, the risk of losing the graft, what it means of -- in a sense of higher mortality rates. And also, the cost of those transplants goes up quite a bit. If we can go to the next slide, please. So these are patients that the health care system has invested quite a bit into. You see here some examples of what it actually does cost the health care system to give a patient a transplant procedure. And if that patient suffers from a CMV infection, that price even goes higher. But that's probably not even the worst challenge in this situation, it's probably the short supply of organs. In the U.S. alone, we have 114,000 patients on the waiting list. And of these patients, on a daily basis, 20 patients will die. So in summary, it's very costly when you get this wrong, and it's highly valuable when you get this right. If you can go to the next slide, please, should be Slide 31. Allow me for a second to highlight some of the facts that we find are really important. This is a highly concentrated area. Here, you have an example of a map of the U.S. where you see where the transplant centers are. And 80%, 90% of these patients are being treated in just slightly above 100 centers. So there, a very small group of very dedicated, very specialized health care teams is taking care of these patients. Another important fact is that all of these patients are in contact with the health care centers. So where we normally see that there might be patients that are not diagnosed or not in contact with the health care centers, all [ 100 of 90,000 ] of these patients are in close contact. And we also know that these centers are very specialized teams, they like really to have a medical and scientific engagement, and they're very quick to change behavior when they see something that they really believe can help those patients better. Now at Takeda, we like to plan ahead. We like to be well prepared. And we've done a lot of research into this area. We obviously know where all these centers are. We do have the capacity to reach all of them, but we still have a plan for who do we want to go to first and what kind of dialogue would we like to engage with -- engage them in. We have plans in place for account engagement. We have plans in place for patient support, making sure that maribavir should be the right thing for the patient, once approved, then it will be possible for the patients to have access. So we will make good use of all the enhanced capabilities that we have built over the recent years, not least, our experiences from the rare disease areas. Next slide, please. So on the left-hand side, I'll try here to illustrate what Obi talked about when you look at what is today's world looking like. It's a number of compromises, it's trade-offs. Physicians basically have to be good at titrations with the current agents. They need to know when to stop. They will not always be allowed to drive the course to the end because of side effects. And we do see that changing with maribavir in the future. We think that we'll have a different paradigm. We think that marivabir will be able to address the efficacy compromises that are present today. We think that maribavir will be able to tackle the safety compromises that are present today. And probably worth noticing as well, as marivabir is an oral agent, patients will be able to be treated at home and not yet again have to potentially be hospitalized because they need a daily infusion. So all that makes us believe that we will go from a present paradigm today to a different paradigm in the future. And maribavir, therefore, has the potential to be a true game-changer in CMV treatment. If we can go to the next slide, please. So in summary, we do believe that we have the building blocks in place for a commercial success. We do know that CMV is the most common infection in post-transplant patients, and the numbers are actually quite high. We also know that CMV infections, despite everything that is done to avoid it, is a problem for 25% of those patients. We have heard that the current options are really suboptimal and they require a lot of compromises. So there's clearly an unmet need, a need for something that can be used to treat the CMV infection without all those compromises, and that marivabir has the potential to change that. We've seen the efficacy data, which are quite impressive. But probably equally important, we've seen the tolerability and safety profile which allows you to do exactly what you want, treating that infection. And then finally, we are on track for a submission to the FDA in the first half of this year, the same for EMA in Europe. And we have detailed in-market preparations underway that makes us comfortable that, once we have approval, that we will be able to bring maribavir to patients in a fast and efficient way. If we can go to the next slide, please, then I will bring this back to Chris. Thank you for your attention.

Great. Thank you, Claus. Okay. So we have a 5-minute break in the agenda now. So we'll take a short break, and then we'll dive into our neuroscience assets after that. So see you back here in 5 minutes. [Break]

Okay. Hello, everyone, and welcome back to Takeda's Wave 1 Pipeline Market Opportunity Call. So we're now going to start the second half of the session. So I'd like to hand over to Sarah Sheikh, who is the Head of our Neuroscience Therapeutic Area unit. Sarah?

Thank you very much, Chris. If you could please go to Slide 36. Next slide, yes, thank you. Good morning, good evening. My name is Sarah Sheikh, and I'm the Head of Neuroscience at Takeda. I'm very pleased to be here with you today and to tell you about Takeda Neuroscience. Let me put it to you that the 2020s have the potential to be to neuroscience what the 20-teens were to oncology, a decade of promise and breakthroughs. Takeda, with its pioneering work in neuroscience, is exemplary of this promise with the programs we are highlighting to you today, Orexin and soticlestat. I've been in neuroscience now for about 20 years as a physician, scientist, drug developer and have experienced firsthand the enormous suffering and unmet need of diseases like epilepsy or ALS. And I'm certain that many of you will know someone with the neurological illness and know what it means to have no available therapy. Yet despite the sheer magnitude of unmet need, one keeps hearing skepticism about drug development in neuroscience, that it is too hard, takes too long, is too risky. But things are different today than they were 10 years ago. Take the encouraging example of treatments developed for spinal muscular atrophy. SMA is a neurodegenerative disease par excellence where babies are destined to die within their first year of life. With development time lines as short as 5 to 6 years, there are now 3 approved, unique, disease-modifying therapies for this condition. These breakthroughs are going to be seen increasingly over the next few years. And it is not only I who believes this, but also the investment community, with seed and Series A funding in neuroscience increasing more than 20-fold over the last 10 years to over USD 1 billion in 2020. So where does this conviction come from, that we can do neuroscience development in a reasonable time frame at manageable risk? At Takeda, we thought about this very seriously and believe it is because of 3 key factors: First, a growing understanding of disease causality through human genetics; second, the availability of translational tools that allow us to derisk programs early; and third, the ability to efficiently reach previously undruggable targets in the central nervous system and muscle. Next slide, please. This is our Takeda Neuroscience road map over the next 3 years and beyond. We have 2 Wave 1 programs which will generate near-term revenue. Both of these are Takeda molecules discovered at our Shonan labs. Both of these will have competitive time lines of around 5 to 6 years, from first in patient to filing in their lead indication. You will hear today about our front-runner Phase III program, soticlestat, in rare epilepsies, Dravet and Lennox-Gastaut Syndrome. And you will hear about our cutting-edge Orexin 2 receptor-agonist program with an initial focus on narcolepsy type 1. In Wave 2, we will see our relatively early pipeline begin to inflect with programs in other hypersomnias, neuromuscular indications and so forth. Next slide, please. I've been at Takeda now for just over a year and firmly believe in Takeda's potential to be a trusted leader and partner in neuroscience. The reason I chose to come to Takeda was because I saw all the ingredients that would allow us to deliver on the promise of bringing transformative medicines to patients with great unmet need and to do so quickly. These ingredients are: First, a commitment to science and innovation; second, the ability to focus; and third, strong execution. Science. Over the past decade, Takeda has created one of the strongest neuroscience R&D capabilities in the industry and has established a network of cutting-edge partnerships. We have, for example, invested in technologies that allow us to solve the challenges of biodistribution to the central nervous system and muscle more effectively. Focus. We see unmet need in all areas of neurology, including psychiatry, but have chosen to focus and have partnered our psychiatry portfolio with Neurocrine Biosciences. This enables us to concentrate our internal resources mainly on rare neurological diseases. And execution. Today, Takeda is showing you how we intend to execute on soticlestat and Orexin. And this was not where it will stop. We will do this again and again and again as our pipeline matures. I look forward to keeping you updated regularly on our progress. Now I'd like to share with you a deep dive on our front-running neuroscience program, soticlestat. Next slide, please. Slide 39. Soticlestat is a molecule with great potential in the treatment of 2 rare epilepsies, Dravet and Lennox-Gastaut, for which we have received orphan drug designation. This molecule, discovered in our Takeda Labs in Japan, was partnered for the execution of the Phase II study with Ovid. Takeda announced a few weeks ago that we have now secured the full development and commercialization rights back to Takeda. Why did we do this? Why do we believe in the promise of soticlestat? There are 3 key reasons. First, a novel and first-in-class mechanism of action. This mechanism has the potential to offer a complementary approach to currently approved antiepileptic drugs when it comes to improving seizure control. Second, we have compelling clinical efficacy and safety data from a placebo-controlled Phase II study called ELEKTRA, in Dravet and Lennox-Gastaut patients, which we will share with you today. And third, our global development and commercial capabilities which will enable us to execute Phase III studies expediently with filings and approvals starting in 2023. Next slide, please. LGS and Dravet are both rare epilepsies manifesting early in life and can lead to severe developmental or intellectual disability. Both have few approved treatments. Let's talk about Dravet syndrome first. There are about 10,000 patients with this syndrome in the U.S. Dravet syndrome is most commonly caused by genetic mutations in the SCN1A gene and is characterized by convulsive or shaking seizures. The more seizures a child has, the more this impacts their cognitive development. Now imagine a parent with an infant that starts having these brutal seizures seek treatment for their infant only to find that some antiepileptic drugs actually worsen seizures in these children, and that they will need to try different treatments, often in combination, which may lead to compounded side effects. Imagine also the fear associated with putting your child to sleep at night and then finding them in bed the next morning dead, something known as SUDEP, or sudden unexplained death in epilepsy, with as many as 1 in 5 children dying before adulthood. Next slide, please. Now turning to LGS. There are approximately 30,000 to 50,000 patients with LGS in the United States. The etiology of LGS is much more diverse than that of Dravet. It can be caused by a number of different reasons, including perinatal insults, such as hypoxia during birth or genetic syndromes or it can be idiopathic, meaning no cause is found. And so this patient population is much more heterogeneous. As a result, families often experience several years of diagnostic delay. The diagnosis is made on 3 findings: Multiple seizure types, which characteristically includes so-called drop seizures; a specific EEG pattern; and intellectual disability. Drop seizures are typically associated with either partial or complete loss of muscle tone. Drops can be as mild as a head drop but as severe as to lead to injuries due to falls. Parents and caregivers are forever on the alert, in crisis mode, through the vagaries of seizures that are resistant to therapy after therapy, caring for patients often unable to care for themselves and worrying about premature death. Next slide, please. Slide 42. Despite some approved therapies for both conditions, a significant unmet need remains, and that unmet need is like a domino effect. First, many patients suffer from refractory seizures despite their physicians trying to control their seizures by using several antiepileptic drugs often at the same time. Using several different drugs at the same time then has the potential for drug-drug interactions as well as additive side effects, safety concerns or need for monitoring. These factors clearly highlight the need for a drug that is effective, safe and well tolerated and with little risk of drug-drug interactions. We believe that soticlestat has the potential to be that drug that meets this great unmet need. Next slide, please. Let me tell you a bit more about the mechanism of action. Soticlestat is a small molecule inhibitor of cholesterol 24-hydroxylase, an enzyme found predominantly in the brain, where it converts cholesterol into 24-hydroxycholesterol, or 24-HC. By inhibiting this enzyme, soticlestat reduces the neuronal levels of 24-HC, which is thought to lead to 2 effects: The reduction of glutamatergic signaling and the reduction of inflammation, both of which are factors considered pertinent to the trajectory of epilepsy and seizure control. Next slide, please. Now to the Phase II ELEKTRA study, which was a global double-blind, placebo-controlled study in 141 pediatric patients with Dravet and Lennox-Gastaut. After completion of the trial, patients could switch over into an optional open-label extension study, and all who qualified did so. The study consisted of a screening period to establish baseline seizure frequency, followed by a 20-week, double-blind treatment period, which included an 8-week dose optimization followed by a 12-week maintenance period. You heard earlier that Lennox-Gastaut and Dravet are very different syndromes with different types of seizures. So I hear you ask why we combine them in the study. The reason is operational efficiency as patients with these disorders are often treated at the same centers. Pediatric patients enrolled into the study were experiencing seizures despite taking up to 4 antiepileptic drugs, so they were experiencing seizures despite being on standard of care. The primary endpoint was the percent change from baseline in seizure frequency in the combined Dravet and LGS population, and the key secondary endpoints included also looking at both Dravet and Lennox-Gastaut populations separately. Please note that the study was of course not powered for efficacy in the 2 populations by themselves. Next slide, please. ELEKTRA was a positive study which met its primary endpoint with high statistical significance. This is based on a combined assessment of convulsive seizures for Dravet and drop seizures for Lennox-Gastaut patients. The way we describe seizure reductions is to take the median seizure reduction in the intervention group and adjust for the rate we see in the placebo group, the placebo-adjusted seizure rate. As you can see here, over both the 12-week maintenance period, the primary endpoint; as well as the 20-week full treatment period, which is important for regulatory purposes, statistically significant placebo-adjusted seizure reductions over 28 days of 30.5% and 25.1%, respectively, were achieved. Next slide, please. Looking now at the Dravet population separately, which was not powered, we see a very clear, statistically significant and clinically meaningful placebo-adjusted reduction in median seizure counts over 28 days of 46%. These results are very compelling as these reductions were achieved on standard of care, put the efficacy into a competitive range with other recently approved products and have encouraged us to move swiftly towards Phase III of development. Next slide, please. For LGS, with a much more heterogeneous patient population, also not powered for significance, we saw a numerical trend for seizure reduction which was not statistically significant. The placebo-adjusted magnitude of this seizure reduction is around 15%, similar in effect to recently approved therapies in this indication. When we looked at the seizure frequency when patients entered the study, we saw a very broad range from 4 all the way up to more than 5,000 drop seizures over the 28 days of the baseline period. Now remember that anything from a head drop to a full-body drop could essentially be counted as a drop seizure. More than 5,000 seizures would mean having a seizure every 7 to 8 minutes during these 28 days, clearly, something that would be hard to count accurately even by the most attentive caregivers. Discussing this enormous variability with our thought partners in the field convinced us that the signal we were seeing was relevant and was drowning in the noise of variability. We also conducted a sensitivity analysis on more countable drop seizures, which further supported the idea that we have to implement a stricter definition for true countable drop seizures for Phase III. This stricter definition of drop seizures will make it more accurate and easier for caregivers to count serious drop seizures and will reduce the variability, allowing us more clearly to see the efficacy signal. Next slide, please. Now turning to our emerging safety and tolerability profile. The results here are consistent with the findings of previous studies with no new safety signals identified. As shown, the incidence of treatment-emergent adverse events and serious adverse events similar were in both the treatment and placebo groups. The most frequent treatment-emergent adverse events reported in soticlestat-treated patients with 5% or more difference from placebo were lethargy and constipation. Overall, the emerging safety and tolerability profile for soticlestat is an important aspect for a potential treatment option in patient populations on multiple drugs with difficult-to-treat seizures. Next slide, please. So what's next? We are working expediently to initiate 2 placebo-controlled, 16-week Phase III studies, one for each syndrome starting as soon as possible. The trial design you see here was agreed upon in discussions with regulatory agencies at FDA, EMA and PMDA and will include patients who still experience seizures despite being on active treatment. The primary and secondary endpoints are typical of pivotal epilepsy studies. With these study designs, appropriate powering for efficacy and implementing our learnings from Phase II to reduce variability, especially for Lennox-Gastaut, we believe that we have a high probability of achieving clinically meaningful and competitive seizure reductions in both syndromes. Data and regulatory interactions permitting, we aim to file for approval in 2023. Building on this profile, I'd like to pass the mic to Erika Gill, Head of Global Commercial Neuroscience, to tell us more about the potential of soticlestat. Erika?

Thank you, Sarah. It is my pleasure to discuss the market opportunity and our global commercialization plans for soticlestat and with you today. Next slide, please. I would like to review the DS and LGS disease burden for patients and caregivers because this is why we are here. Our purpose at Takeda is to bring transformative, life-changing therapies to patients worldwide. As you just heard, DS and LGS patients currently face numerous treatment challenges. Despite currently available medications, persistent seizures remain a problem for most patients. These unpredictable and frequent seizures can be violent. This is a life-threatening disease. There are concerns about addictive side effects from therapy, which is compounded by drug-drug interactions. Caregivers carry a continuous fear of death for these patients. For a caregiver, they're managing multiple medications, trips to the doctor and consistent drug monitoring due to safety risk in addition to their daily efforts to care for their loved one. Caregivers' and patients' quality of life is severely impacted as a result. Soticlestat has the potential to address these unmet treatment needs. We believe we can demonstrate robust seizure reduction with our novel mechanism of action that Sarah discussed earlier. Our studies to date point to low rates of adverse events. We do not anticipate clinically relevant drug-drug interactions. And we do not anticipate safety concerns that would require routine monitoring. With soticlestat, we hope to raise treatment expectations and extend treatment goals beyond seizure reduction and simplify treatment. Next slide, please. We are excited for the opportunity to bring soticlestat to DS and LGS patients, if approved, a novel potential first-in-class therapy. We estimate roughly 10,000 diagnosed DS patients and between 30,000 to 50,000 LGS patients in the U.S. Although there is an appreciation for these diseases today, we believe there's an opportunity to expand awareness and increase diagnosis. Most DS and LGS patients are already on therapy at the time of diagnosis, but around 80% of patients are not well controlled on current therapies and seek new treatment options. Let me repeat. 80% of patients are not well-tolerated on current treatments and seek new options. So let's discuss how soticlestat could potentially be used. While we believe that soticlestat's profile supports early line use, it may be considered before products that require trade-offs between efficacy, safety and tolerability. And in addition, Sarah shared with you the clinical trial data from ELEKTRA, demonstrating soticlestat's efficacy when added to patients' standard of care. So soticlestat can address both early line use and can be added to a patients' standard of care when seizures are not controlled. Next slide, please. There are significant unmet needs for the DS and LGS community. Beyond seizure reduction, we aim to simplify treatments for patients, caregivers and physicians. To meet these needs, we will focus on 3 areas. First, redefining treatment goals. It's critical that we educate patients, caregivers and physicians and payers about the unmet needs for DS and LGS patients, holistic treatment goals beyond seizure reduction. We aim to quantify the clinical outcomes and the humanistic burden of DS and LGS patients. Second, we are preparing for global approvals beginning in fiscal year 2023, starting first in the U.S. We'll focus on improving awareness and diagnosis rates for both DS and LGS. We plan to execute an evidence-generation strategy to support rapid and broad access. And we will be leveraging our global capabilities in rare disease experience to prepare for launch. And finally, we will establish soticlestat as the treatment of choice for DS and LGS, positioning soticlestat's use early line once approved. With soticlestat, we hope to raise treatment expectations, extend treatment goals beyond seizure reduction and simplify treatment. Next slide, please. Today, we've shared with you an example of our focus and execution as a Takeda Neuroscience franchise. Let's summarize the main ideas that we shared with you today about soticlestat. First, soticlestat has a potential novel and first-in-class MOA. Second, Sarah shared with you our compelling clinical efficacy and safety data from our ELEKTRA placebo-controlled Phase II study in DS and LGS patients. And finally, Takeda's global development and commercial capabilities will enable us to execute Phase III studies expediently. We are preparing for approvals starting in fiscal year 2023. We hope to raise treatment expectations, extend treatment goals beyond seizure reduction and simplify treatment. We look forward to partnering with the DS and LGS communities to bring soticlestat to patients, caregivers and physicians. I would now like to introduce Elena Koundourakis, Head of Takeda's Orexin franchise, who will share with you our Orexin franchise strategy, another example of Takeda's neuroscience, rare disease focus and execution. Elena?

Thank you, Erica. Good morning, and good evening, everyone. It is my distinct pleasure today to provide the Orexin franchise strategy update in today's R&D event. Next slide, please. It is truly remarkable how far we've come with our pioneering multi-asset Orexin franchise since the last R&D Day in 2019. TAK-994 as the first oral Orexin agonist with the potential to address the underlying deficiency in narcolepsy type 1 met the prespecified criteria in the ongoing Phase II study, TAK-994-1501 and has now progressed to Phase IIB. We will review this important data in later part of the presentation. We believe that we are on track to achieve our aspirational goal to bring the first oral Orexin agonists to patients with narcolepsy type 1 in FY 2024. TAK-994 has also met an early proof-of-concept in sleep-deprived healthy volunteers in study TAK-994-1503, supporting its potential use in additional sleep/wake disorders with normal Orexin levels such as narcolepsy type 2 and idiopathic hypersomnia. In addition to TAK-994, we now have a multi-asset Orexin franchise, including TAK-925 IV formulation, and TAK-861, a potentially longer-acting oral Orexin agonist. This allows us to explore the potential of Orexin across multiple indications and with different assets. Following the transformational efficacy potential demonstrated in narcolepsy Type 1 with TAK-925 IV formulation, we have now achieved 4 additional early proof-of-concepts in settings with normal Orexin levels. That includes residual excessive daytime sleepiness in obstructive sleep apnea, data which will be presented at the American Academy of Neurology this April. Finally, TAK-861 will enter clinical development in fiscal year 2021. We are confident in our discovery and development capabilities to accelerate our multi-asset Orexin franchise to support broader users of Orexin as a master regulator of sleep/wake, respiration and metabolism. Next slide, please. Let me walk you through how we go to this day. I would like to start by diving deeper in the field of central disorders of a hypersomnolence and as to why Takeda is interested in exploring these indications. Sleep disorders like narcolepsy type 1, narcolepsy type 2 and idiopathic hypersomnia are diseases with significant unmet need because health care professionals often misdiagnose them. Why is that? In the spectrum of these disorders, there are many common symptoms but also differences. As you will see in this grid, in oral NT1, NT2 and NIH, excessive daytime sleepiness is a common clinical feature. That translates into difficulty for patients to stay awake. Importantly, only narcolepsy type 1 is characterized by cataplexy, which is a sudden loss of muscle tone often triggered by strong emotion, such as laughter, fear, anger or frustration. Sleep inertia, on the other hand, difficulty for patients to wake up appears to be a very characteristic symptom in idiopathic hypersomnia. As a result of this complex differential diagnosis, health care professionals have difficulty to recognize these diseases. It can take up to 15 years for patients to receive a proper diagnosis, and treatment can be suboptimal for many of these patients. Finally, while very little is known about the pathophysiology in narcolepsy type 2 and idiopathic hypersomnia, there is a strong biologic link to Orexin deficiency in narcolepsy type 1 This is why with our Orexin agonist, we have initially focused our attention in this disorder. Next slide, please. Now let's focus on NT1 and what is like for patients to live with this chronic, severe and debilitating disease. The ability to stay awake is critical for us to live a healthy and productive life. Although it may be less commonly known, narcolepsy type 1 impacts people's lives by inability to stay away during the day, sleeping at night and the feeling of constant exhaustion. In particular, the fear of cataplectic attacks disrupts daily life at work, school and social interactions. Individuals with narcolepsy type 1 find their lives dramatically impacted day after day and night after night, feel misunderstood by health care professionals and society alike. Failing grades, poor job performance, ridiculed by peers are only few of the devastating socioeconomical consequences from this debilitating disease. To quote the patients voice, "We take current medications to survive. We want new medications to help us live." These patients deserve better treatments to live better lives. Next slide, please. We believe that with an Orexin agonist, we may have a potential better medication for these patients. Narcolepsy type 1 is long known to be caused by severe loss of Orexin-producing neurons in the brain. On the cartoon on the left, you see the Orexin neurons and the receptors in orange, the Orexin peptide in blue in a healthy individual. In the middle, an individual with narcolepsy type 1, the Orexin neurons are lost, resulting to lower levels of the Orexin in blue, reducing downstream neurotransmitter activity, which results to excessive daytime sleepiness. However, in this disease state, the Orexin receptor in orange remain intact. Therefore, on the right, our Orexin therapeutic hypothesis that the dark orange, Orexin agonists activate the receptors and that could lead to increased downstream neurotransmitter activity promoting wakefulness again. We believe that the severe loss of Orexin neurons in narcolepsy type 1 presents a unique treatment opportunity. A highly specific Orexin agonist may be able to restore the downstream activity of neurotransmitters and promote wakefulness as a monotherapy. Next slide, please. There were many challenges along the road to discovery for our Takeda scientists in Japan. In recent years, very little progress has been made toward the goal of developing agonist for the Orexin receptors compared to relatively active development of antagonists, some of which are already on the market. You might be wondering why is that. As you can see in the right upper box of the slide, the Orexin peptide is too large and cannot penetrate the blood-brain barrier. However, a large molecule is needed to activate the receptor. An antagonist, on the other hand, can penetrate the blood-brain barrier and only needs to block the receptor to show efficacy. Therefore, the potential solution to the problem as shown in the bottom of the slide is for an agonist to be small enough to penetrate the blood-brain barrier, activate the receptor and to signal downstream wakefulness. Moreover, our research laboratories had appropriate capabilities in G protein coupled receptors and prior experiences in medicine that we're able to leverage to achieve this innovation. We believe that with TAK-925, our dedicated Takeda scientists in Japan discovered the first Orexin agonist that has appropriate physiochemical properties and good blood-brain barrier penetration to be able to activate the receptor and promote wakefulness. Next slide, please. So now let us look how this innovative approach is playing out in our clinical research. I would like to remind you the data that were presented in the European Sleep Research Society in September of 2020. On the left, we show in red the dramatic reduction of weekly cataplectic attacks with TAK-925 IV formulation during 7 days repeated infusion of a lower 11-milligram and a higher 44-milligram doses, which was nearly 0. No cataplectic attacks for these patients whatsoever. This result correlates well with a dramatic improvement in sleep latency measured as maintenance of wakefulness test, MWT. During this test, individuals are asked to stay awake as long as possible in a dark quiet room for 40 minutes. Under these conditions, a healthy individual can stay awake for about 30 minutes, while an individual with narcolepsy type 1 can stay awake for about 3 minutes. On the right, the same doses of TAK-925, 11-milligram and 44-milligram, we're able to keep patients awake for 23 and 40 minutes in maintenance of wakefulness test, respectively. That means complete wakefulness for these patients. No serious adverse events were reported, and no subjects were discontinued from the study due to an adverse event. This is the first demonstration of the potential for an Orexin agonist to provide the medication for patients with narcolepsy type 1 that may make them feel normal again. Next slide, please. Beyond the early proof-of-concept in narcolepsy type 1, we were able to show again and again similar evidence of potential transformational efficacy approaching sleep latency values close to the maximum of 40 minutes in the MWT in a variety of indications and settings. In this slide from left to right, we show consistent, highly statistically significant values in MWT in narcolepsy type 2, sleep deprived paradigm, relapsing excessive daytime sleepiness in obstructive sleep apnea and recently obtained data in idiopathic hypersomnia. These are internal data on file, not yet disclosed at the medical conference. As disease settings and study varies, the data shown are only day one results from individual studies, which are quite comparable. Again, no serious adverse events were observed. No discontinuations. Increases of urinary events and blood pressure were observed in some of the studies. Safety comparisons between studies are difficult, and numbers of subjects were too small to draw definitive conclusions, which may also vary by disease setting. During our clinical program, we are careful in optimizing the dose, which will provide optimal efficacy and safety ratio for the impendent population. The data in aggregate support the potential for an Orexin agonist in additional indications beyond narcolepsy type 1. Next slide, please. So now let's move on to the development of an oral Orexin agonist following the learnings of the Orexin IV formulation. With TAK-925 Orexin agonist IV formulation, we have observed excellent translatability between preclinical and clinical studies. Using the same in vitro and in vivo models of narcolepsy, we showed in red profound increases of wakefulness and reduction in cataplectic attacks with BOS-925 on the left and TAK-994 on the right. These preclinical observations suggested that TAK-994 may have comparable efficacy to that of TAK-925. We use the preclinical models to make pharmacokinetic and pharmacodynamic predictions and to inform the clinical studies designed with our oral Orexin agonist, TAK-994, that we will be discussing next. Next slide, please. That brings us to the most anticipated update for today's presentation from our ongoing Phase II study, TAK-994-1501 in patients with narcolepsy type 1 and narcolepsy type 2. This is the so-called SPARCO study. This is a quite complex study with 4 parts. Let me walk you through the study design. On the left part of the slide, you see the part A. Approximately 15 patients with narcolepsy type 1 were treated for 4 weeks. On the basis of the unblinded Part A data and independent review committee recommended the progression to Part B. Part B on the right is a dose-ranging Phase IIb study in narcolepsy type 1 for 8 weeks, 3 doses versus placebo in a 1:1:1:1 ratio. Part B is designed to support the pivotal program. Endpoints for this trial are as with previous trials, sleep latency in MWT: the Epworth sleepiness scale, ESS; and weekly cataplexy rate; VCR; as well as safety. The study also includes a Part D cohort in narcolepsy type 2 patients and a Part C China cohort, which will allow us to include patients from China in our Phase III program. Both parts will be initiated following Part A. Data from Part A and B will be disclosed at a major conference at the end of the study next year. This is to preserve data integrity as Part B is designed to support the registrational efforts. Data from SPARCO study 1501 are encouraging for the progression of our program against our aspirational targets for complete wakefulness in narcolepsy type 1. Next slide, please. So now let me explain to you a bit more what these results may mean for patients. As you can see on the left, the current treatments in narcolepsy type 1 offer suboptimal efficacy levels of sleep latency in MWT with placebo-adjusted values less than 8 minutes. With TAK-994, we target this aspirational sleep latency in MWT above 30 minutes, which would allow patients to feel normal again. Based on the prespecified criteria from Part A, MWT had to be at least 30 minutes. And additional endpoints in Epworth sleepiness scale and weekly cataplectic rate at and safety had to be met. We feel that on the basis of these results, not only we have met the proof-of-concept for an oral Orexin agonist in narcolepsy type 1, but that we are on target to meet that bold goal to transform patients' lives. Next slide, please. In addition to the recent progress we've made with TAK-994, in narcolepsy type 1, we are also able to demonstrate efficacy in sleep-deprived, healthy volunteers with normal Orexin levels. On the left part of the slide, you will see that a low and a high dose of TAK-994 produced 32 and 37 minutes in the sleep latency in MWT compared to 13 minutes in the placebo group. On the right side, we show how this level of efficacy correlates with subjective measurements of response in the Karolinska sleeping scale where patients reported how they felt while on TAK-994. TAK-994 was well tolerated with no serious adverse events and no discontinuations due to adverse events. The safety and efficacy data in study 1503 were similar to the data we showed with TAK-925 IV in the same setting sleep-deprived, healthy volunteers. We believe that this data also support the broad use of an oral Orexin agonist, TAK-994, beyond narcolepsy type 1. Next slide, please. Collectively, the data from studies 1501 Part A in narcolepsy type 1 and 1503 in healthy volunteers with normal Orexin levels will help designing and executing the pivotal studies between fiscal year 2021 through fiscal year 2023. We will use the Part A data from 1501 to engage with health authorities and to inform the Phase III study design. We target the first approval for patients our highest unmet need for narcolepsy type 1 in fiscal year 2024 in consideration of the clinical data, regulatory and payers' requirements. We will leverage the knowledge acquired with TAK-994 and TAK-925 IV formulation to explore additional indications and position follow-on compounds such as the potentially longer-acting oral Orexin agonist, TAK-861, to address diseases with high unmet need. Next slide, please. In conclusion, Takeda is poised to deliver on the incredible promise of the Orexin with a priority and laser focus to initially secure approval of TAK-994, the first oral Orexin agonist, to address the underlying disease in narcolepsy type 1. Erika Gill, in the second part of this presentation, will discuss how TAK-994 may be able to transform how we treat patients with narcolepsy type 1. We will continue to develop and expand the potential for Orexin agonist in narcolepsy type 2 and idiopathic hypersomnia given preliminary encouraging data supporting its use in this additional sleep/wake disorders that are misdiagnosed and undertreated. Finally, we will continue evaluating the potential of Orexin therapeutics for additional indications as the master regulator of sleep/wake, respiration and metabolism. Thank you very much, and I would like now to hand it off to Erika to take a deep dive on our oral Orexin agonist, TAK-994, and our primary indication for narcolepsy type 1. Erika?

Thank you, Elena. We are excited about the potential of our pioneering Orexin franchise, which includes the of exploration multiple assets and indications. Let's take a deep dive on our oral Orexin agonist, TAK-994, and our primary indication in narcolepsy type 1. Next slide, please. There are 3 main ideas I want you to know. First, on the spectrum of hypersomnia disorders, NT1 has a high unmet need. It is chronic and severe. We know NT1 is caused by an Orexin deficiency, which is the severe loss of Orexin-producing neurons in the brain, resulting in the inability to regulate sleep/awake cycles. Second, we know current treatments do not address the underlying cause of NT1, the Orexin deficiency. And third, Takeda is pioneering the field of Orexin therapeutics with a multi-asset franchise led by oral Orexin agonist, TAK-994. If approved, it will be the first to address the Orexin deficiency in NT1. We anticipate our first approval starting in fiscal year 2024 with intentions to expand beyond NT1. At Takeda, we want people with narcolepsy to do more than survive, we want them to thrive. Next slide, please. The ability to stay awake during the day is critical for us to live healthy and productive lives. Although it may be less commonly known, NT1 impacts people's lives to the same degree as epilepsy and other serious neurological disorders. Make no mistake, people with NT1 find their lives dramatically impacted day after day and night after night with debilitating symptoms, including excessive daytime sleepiness, hallucinations upon falling asleep or waking up, sleep paralysis and disrupted nighttime sleep. NT1 is different than other hypersomnias because of the lack of Orexin and the presence of cataplexy. Cataplexy is a sudden loss of muscle tone, often triggered by strong emotions, which we all feel every day, such as laughter, fear, anger or frustration. To illustrate what cataplexy is like, I want to share a quote from a person with NT1. "I collapsed on the ground like a marionette puppet without strings, dropped all my books and could not move. It was my first full-body cataplexy. And I could not find the words to explain what happened. I felt so awkward and embarrass and dumb. I refused to return to school." So just imagine, collapsing to the ground when it's schooled due to cataplexy, falling asleep well driving or struggling to stay awake at work because of the uncontrollable urge to sleep. That's the reality for people with NT1. Next slide. The journey to diagnosis can be long and burdensome with a mean diagnostic delay of 15 years or less in other regions. Some symptoms start in adolescence or could start later in life. And up to 46% of people are misdiagnosed at some point along the way. Think about that, 46% of people are misdiagnosed at some point. Well, let's discuss why. Symptoms can start during adolescence, but common comorbidities such as depression, anxiety can mask underlying narcolepsy symptoms. Individuals may be misdiagnosed with mood disorders, ADHD, chronic fatigue, schizophrenia, obstructive sleep apnea or even epilepsy. People with NT1 may not recognize or report cataplectic events, such as a head drop, slight eye drooping, buckling of the knees or dropping things. Physicians often do not ask about these symptoms in their pursuit of a diagnosis. This is due to limited training about narcolepsy in medical school and because NT1 is rare. Even sleep specialists have low comfort levels in diagnosing narcolepsy. Overall, this leads to incredibly core diagnosis rates ranging from only 6% in China to 30% to 50% across the United States, Europe and Japan. Once a person is diagnosed, they're prescribed treatment. However, there are significant trade-offs with current treatment options. Next slide. All current treatments are geared towards managing symptoms and do not address the underlying Orexin deficiency of NT1. Treatment escalation and polypharmacy are common. 50% of newly diagnosed patients will progress to second-line treatments within 1 year. 65% of these patients will receive more than 1 medication to fight their disease. Wake-promoting agents and stimulants are frequently used to reduce symptoms of excessive daytime sleepiness, while antidepressants may be added off-label to decrease cataplexy events. People with narcolepsy find themselves wired but tired. NT1 is not controlled on current treatments. 75% of people with narcolepsy still experience daily excessive daytime sleepiness despite treatment, and over 50% still experience daily cataplexy. This is because current treatments do not address the underlying Orexin deficiency. I want to share a quote from a physician, "We are not curing these patients. They improve, but they are not normal. We need to get them to normal." As you've seen today, TAK-925 and TAK-994, excessive daytime sleepiness as measured by the maintenance wakefulness test, or MWT, and cataplexy data suggests the possibility to bring people with NT1 closer to normal by targeting Orexin deficiency. Next slide. When determining a treatment, patients and physicians make efficacy, safety and tolerability trade-offs. For a person with NT1, they are managing the ability to stay awake during the day, avoid cataplexy, and conversely, they struggle with being able to sleep at night. Today's medications do not address the underlying Orexin deficiency. People with narcolepsy feel they lack control over their lives, and they take part medications to survive throughout the day. About 90% of survey patients believe there is a need for more treatment options, and over 90% of physicians want a new treatment with a new MOA. Think about that. More than 9 out of 10 patients believe there's a need for more treatment options and so do we. By addressing the underlying Orexin deficiency, we want to help people with narcolepsy to do more than survive. We want them to thrive. Next slide. Given these diagnostic hurdles and current treatment options, NT1 is underdiagnosed and undertreated. In the U.S., there's approximately 135,000 adults with NT1 and an estimated 50% diagnosis rate. There are an additional 500,000 adults across EU, Japan and China. However, diagnosis rates are even lower. I also want to highlight that NT2 has approximately a prevalence rate of 300,000 in these markets and an estimated diagnosis rate between 6% and 50%. IH has 100,000 to 200,000 prevalence with diagnosis rates that are only around 6% to 30%. Returning back to NT1. Despite NT1 being a chronic disease, the treatment rate is only 75% for the reasons I highlighted previously. In addition, 29% unemployment rate has been reported for people with narcolepsy, with 2/3 attributing leaving their job because of their diagnosis. As such, high out-of-pocket costs make it very challenging for people with narcolepsy to remain on therapy, especially if they're on a polypharmacy. Given the low diagnosis rates, patients uncontrolled on current therapies, there's an opportunity to shift the landscape and change how people with NT1 are diagnosed and treated and grow the market. Next slide. TAK-994 has the potential to transform the way NT1 is currently treated by addressing the Orexin deficiency that causes the disease. Unlike any of the current treatments on the market, Takeda is getting at the root of the problem with an oral Orexin agonist. Our goal is to gain the first approval for oral Orexin agonist, TAK-994, starting in FY 2024, if successful. To transform this market, we seek to do 3 things: first, elevate the unmet need and improved diagnosis rates. We are conducting several real-world evidence studies to demonstrate the serious burden and unmet needs of NT1 globally, which we believe is underestimated today. There's an opportunity to educate physicians, people with narcolepsy and payers to elevate the awareness of Orexin biology, pathophysiology and NT1 unmet needs. Second, we are doing the work today to prepare for a global launch in NT1. We are focusing on a robust evidence generation plan with new patient-centric endpoints to support broad and rapid patient access through value-based pricing. We are also planning for label expansions in NT2 and IH. And lastly, we will leverage Takeda's rare disease experience, our history of success in neuroscience as well as our global and local commercial capabilities to establish TAK-994 as a breakthrough treatment and a growth driver for Takeda. Next slide. So to summarize, our key takeaways from the presentation today, we know NT1 is a serious and devastating disease. We know NT1 is caused by an Orexin deficiency. And we know there are serious diagnostic delays and missed diagnosis rates. We know current treatment options do not address the underlying Orexin deficiency that causes NT1. And we know that over 90% of people with narcolepsy believe there's a need for more treatment options. If approved, oral Orexin agonist, TAK-994 will be the first to address the Orexin deficiency in NT1. We will set new expectations for people with NT1. I would now like to introduce Uthra Sundaram, Executive Vice President and Global Product and launch Strategy. Uthra?

Thank you, Erika, and hello, everyone. If you could move to the next slide, which is Slide 79. I would like to reinforce that our goal to transform patient lives is really realized to the strong partnership of R&D and commercial, some of which you've got to see today as well. And it begins very early in the early stages of development, driven by a science-based approach and a patient focus throughout the process. If we move to the next slide. As showcased by the team today, we recognize the value of strong launch preparation as it requires us to understand the local standards of care and patient unmet need, knowing every portfolio will need something different. Knowledge of the unique aspects of the health care system, which will be different and different geographies and different diseases is incredibly important. So we spend a lot of time mapping out that patient journey and focusing on elevating various aspects of that journey, ranging from diagnosis to treatment. We have and will continue to build a strong data backbone, which allows us to be more sophisticated with advanced analytics. Our patient services team is fit-for-purpose for each disease area with a spine of services and analytics to help increase best practice sharing, but more importantly, to elevate the patient experience. We have strong alignment between medical and market access and have been able to implement a number of value-based agreements, including in rare diseases, looking at total cost of care, such as hospitalization costs, to demonstrate value of our therapies and ensure reimbursement of our medicines. Our digital capabilities focus on areas ranging from all the way starting from patient diagnosis and gene testing to HCP customer engagement. And finally, as you heard again and again today, clinical and real-world evidence is key to educating the community on how our transformative therapies can most benefit the patients. It is our leadership responsibility to enhance the scientific knowledge on our therapies and provide health care professionals with the latest evidence-based information and the data to support the best patient care. Moving to the next slide, Slide 81. Now this slide is truly a testament that our capabilities ensure our most promising pipeline assets are ready to become the next-generation global brands with significant market potential. Due to our strong partnership with R&D and our proven commercial capabilities, we are confident in our aspiration for our Wave 1 assets. You've seen this slide before from our last update in December. I do want to call out that we've just included soticlestat with peak revenue of $400 million to $500 million for Dravet and Lennox-Gastaut syndrome given we have now closed the deal with Ovid. And with that, I'd like to hand it over to Chris for an overview of upcoming events.

Great. Thank you, Uthra. So before we open up for Q&A, I'd like to just give a quick overview of the upcoming investor events. So firstly, fiscal 2020 Q4 results will be coming next month on May 11. And since we did not feature oncology much today, we do plan to do an oncology strategic update call sometime in June, followed by a deeper dive on pevonedistat when the Phase III data becomes available. So with that, we would like to open the call up to Q&A. We will take questions from both the Japanese and the English phone lines, and we ask that if you have questions, you ask all of your questions upfront. Participating in the Q&A panel today, we have all of today's speakers. In addition, we also have Costa Saroukos, our Chief Financial Officer; and Ramona Sakura, President of the U.S. business unit and Global portfolio commercialization, also available to take questions. So with that, we will open up the phone lines. Operator, over to you.

[Operator Instructions]

[Interpreted] The first question is about oral Orexin agonist 994, Page 65. You have explained the POC on Page 65. And Part A, I think the huddle set here is 30 minutes. So on average, you exceeded 30 minutes, and that is why you have forwarded or you moved to Part B, is that correct? And I think you said the sample files was 18 for Part A. Is this correct? I would like to double check. So that's my first question. And the second question is going back to the beginning, R&D expenses explained by Christophe, JPY 500 million to JPY 550 million in FY '21. So this is the actual specific level of R&D expense for FY '21, JPY 500 billion to JPY 550 billion? That's my second question. And the third question is about marivabir. I understand the differentiation against the existing treatment. And maybe this is not direct competition, but Merck has letermovir, and it's doing pretty well. So how do you differentiate against Merck's product? Do you think it's actually possible to differentiate against them? So those are the three questions I have.

Yamaguchi-san, thank you very much for your questions, and thank you for staying awake so late to join us. I'm going to ask Christophe to start with the first question on -- that you asked on R&D expenses. And then, Elena, if you could jump in and take the second question regarding the Part A of the 1501 994 study. And then Obi, I'll hand you the question on maribavir differentiation versus letermovir. Christophe?

Yes. Thank you to -- so yes, what we wanted to give you an insight about our R&D investment in 2021. So between JPY 500 billion and JPY 550 billion because it is quite a significant increase, it's really a good sign that our pipeline is progressing. I mean you have seen how life-transforming our treatment are. We are reaching a level of pipeline development, which require this incremental investment. I do want to stress that we do not expect the same level of increase in the year '21. But clearly, we are investing on R&D because we have such a promising pipeline. Thank you.

Yes. Yamaguchi-san, thank you for the question. You are correct that the prespecified criteria for Part A data was, indeed, we exceed the 30-minute hurdle. And we are pleased to inform that we have managed to do exactly that. And in addition to the MWT, criteria, we have been targeting to show improvement in the weekly cataplexy rate as well as the Epworth sleepiness scale, and all endpoints directionally are favorable and consistent. However, we would not be able today to disclose the details for this data. As we discussed during the presentation, it is very important to keep Part A and Part B together as secure as possible, if you like, given that we try to use this data to support our registrational efforts as we would like to do everything we can to bring this important medicine to patients as soon as possible. Thank you for your question.

And Elena, on the sample size for Part A?

Yes, that's correct. Yes. These analysis are still underway. So I don't have the exact number of subjects. We have been targeting 18 subjects at least to move into Part B.

So thank you, Yamaguchi-san. Thank you for your question. So our program is focused on treatment of CMV infection. The product you mentioned, letermovir is actually licensed for prevention of CMV infection. Now here's the kicker. Despite prevention, Claus had mentioned about 25% of patients or 25% of transplant recipients would need to be treated for CMV infection. This is despite prevention. So despite the presence of agents for prophylaxis, up to 25% still need treatment. In fact, in the Merck study, the number of people who needed treatment was 39%, so even larger than the number that Claus mentioned. So we are operating in different areas of management. We have focused on treatment. And to date, we have the most comprehensive data for treatment of CMV, more than any other products that existing in the market. The products you measured has no studies or no registration studies or no completed studies in treatment of CMV infection. Maribavir remains the only product that has gotten this far, with respect to treatment of CMV infection.

Yamaguchi-san, did that answer your question?

[Interpreted] One simple follow-up question for the first question. So JPY 450 billion this year and then other expenses increased to JPY 500 billion to JPY 550 billion next year. But going beyond that, is it going to increase or decrease? It's a simple question.

It will increase, but at a low pace compared to what you see in '21. Costa, do you want to add anything?

Yes. Thank you very much for the question, Yamaguchi-san. I just also want to elaborate that we won't be making any changes to our financial targets, our commitments on the margin as well as our deleveraging targets. The margin that we've committed to are mid-30s and also underlying COVID operating profit as well as the 2x net debt to adjusted EBITDA ratio by fiscal year '21 to '23 remains unchanged. And the reason for that is we continue to strive and look at opportunities in overall OpEx efficiencies. We continue to find further improvements in cost of goods. And we're also looking at continued acceleration of top line revenue growth, which will definitely be a driver to delivering our financial commitments. We'll provide a lot more color on the financials for fiscal year '21 during our earnings event on May 11. So thank you very much for the question.

[Foreign Language]

This is Muraoka, Morgan Stanley. I'd like to ask you questions. First question is about TAK-994. Going forward, regarding update of data, like 1501 studies or NT1 patient populations, the -- what is the next update of the data? Could you give us some outline? And also safety of 994, it was described that it was good in healthy volunteers. And didn't you have any issues in NT1 patient population? And as you increase the size of the clinical trials, what could be a potential side effect or adverse events that you may have a concern? That's about 994. And another question is about maribavir. I think a long time ago, before Shire, I think you introduced this from GSK. And what I'd like to ask you is about LOE. It took time for developing this compound. Therefore, what is LOE? I think usually in orphan, it's 7 years. And that's it, the end of LOE? Or you'd have a longer LOE?

Thank you very much, Muraoka-san. Elena, if you could take the first question regarding data disclosure on 994 and the safety profile. And then, Obi, you can touch on the question regarding the exclusivity from marivabir.

Yes. Muraoka-san, thank you very much for your questions. First of all, with regard to TAK-994, the next steps, as we outlined in our presentation, we would like to present the data from Part A and Part B together at the end of the study, which will be next year. And we would like to do this in a major medical conference to be able to highlight the details in an appropriate significant forum first. In addition to -- in the question with regard to the safety, we have not shared, obviously, today the concrete safety results for TAK-994 in the NT1 population. However, we have shown that we have achieved consistently -- consistent good safety profile across all our studies to date, starting with TAK-925 and now moving on to TAK-994. We are extremely encouraged by the fact that both compounds were very well-tolerated. There were no adverse events leading to discontinuations. So basically, all patients were able to stay on drug for the duration of the study. This is extremely encouraging. We have observed with TAK-925, urinary events as well as blood pressure increases in some studies. And throughout our clinical program, we try to optimize, if you like, the dose, to be able to provide the maximum efficacy while we maintain an acceptable safety profile for these patients. As I said, we are quite encouraged by the data we saw in the healthy volunteers in TAK-994, that they are very consistent with what we saw with 905. We do not anticipate any surprises. Having said that, as you said, with longer sample size with longer duration of trials, we will continue monitoring the adverse event profile, and we will try to optimize the dose to find the maximum efficacy and minimize safety. Thank you for your question. Obi?

Yes. Thank you, Muraoka-san. As you can see on the slide, yes, you're correct, our product has been in development and the patents have now expired. However, we have orphan drug designation, which gives us up to 7.5 years protection in the U.S. at 12 years in the EU. Now this extra time is because of the pediatric programs. We have consultation. We plan to [ exploit ] our major regions but we are also going to see orphan drug designations for the products. So our market exclusivity is from orphan drug designation.

[Foreign Language] Thank you very much. We'd like to move on to the next question, please.

Cacciatore, if you please.

This is Ken Cacciatore. Can you hear me?

Hi, Ken. Yes, we hear you.

Congratulations on all this wonderful data and updates. Really nice progress. Just had a little bit of a follow-up question on 994 and the tolerability, as you just mentioned, you keep referencing that it's in line with 925. I believe that there was one patient that had insomnia and a couple that had hypervigilant. So just wondering if that you could give a little bit more perspective around if you're seeing that at all with 994, any more nuance around that? And then back to Maribavir, really, again, wonderful data. Can you give us a sense of pricing? I know it's early to talk about it. Could -- maybe you could help frame, obviously, with a shorter duration asset, maybe how you view pricing? And also similarly, with 994, talking about a much broader patient population and, obviously, a global product. So how do we balance pricing ex-U.S. and U.S.? And obviously, given the market leader is fairly high-priced, are you targeting something a little bit lower to be able to go to a broader population?

Thank you very much for the question. What we'll do is we'll start with Elena, who can help to discuss the 994 tolerability profile, in particular, around insomnia. And then maybe, Erika, we'll go to you to talk a little bit about Ken's question regarding pricing across populations for 994. And then Claus, we'll go to you on Maribavir pricing question.

Yes. Thank you, Ken, for the question. And I'm actually sorry that I cannot disclose very specifics, but you would appreciate that with TAK-994, we are still in early phases of our journey. While the Part A data are encouraging, it's still early days. And our Part B, as the first next study, will provide additional definition of our safety profile over longer duration of treatment. Therefore, I think it is premature to really speculate on adverse events. However, as you can imagine, we will continue evaluating the safety profile, especially in consideration with everything we see with 925. And then we will try to determine the benefit risk for those patients in the next studies. So again, I cannot disclose details because it's early days, but the initial data from 994 are very, very encouraging because they are very consistent with what we see with 925. Thank you for the question.

Ken, it's Erika Gill. So thanks for your question regarding our thoughts on pricing strategy for TAK-994. So first, as Elena had described, we are very excited about TAK-994 and the potential for multiple indications. However, we are really prioritizing NT1 as the first indication because it has the highest unmet need. So as you know, with Takeda, our aim is really to make medicines accessible to as many patients as possible while recognizing the value that they bring. So we are already working with physicians, patients, health care authorities and payers to understand what they want us to demonstrate above existing standards of care, especially as a transformational therapy. So this feedback has been incorporated into our development plans and our evidence generation plans. And so although we're not disclosing our pricing strategies today, I want you to know that we are doing the work today to support value-based pricing and to support broad patient access. Thank you for the question.

And thank you for the question on Maribavir as well. So the way we think about pricing for Maribavir start with the value that we think this brings to these patients. And as we've been through, we think these patients really need a much better agent than what is out there today, and Maribavir can deliver on that. So that should call for a high value. At the same time, it is really important to us that we get access to almost all patients, if not all patients. And therefore, we will ensure a price level that takes that into account. Maybe just one thought on the context. Some of the agents that are being used today will be a daily infusion, which could, for some patients, mean that they have to be hospitalized, which is obviously a very high price level overall for that treatment. So we actually think that we are in a good space where we bring a lot of additional value. And current treatment options are really not that attractive.

Before we move on to the next question, just given the comments that Claus and Erika have made regarding patient access, I thought we might dial up. And Ramona, who's on the line, perhaps you can talk a little bit about Takeda's tiered pricing approach.

Yes, absolutely, Andy. Can you hear me okay?

Perfectly.

Excellent. Thank you, Ken, for the question on pricing. And as the team mentioned, while we're not disclosing pricing it, we are working now to determine the right balance between pricing, looking at the competitors, looking at the value that we're bringing to the market with these molecules, which is significant as well as access and utilization. I will say that across the globe, Takeda does have a tiered pricing policy. So what we do is we look at countries and we group them into tiers based on a number of factors such as the sophistication of the health care system, the availability of health care, GDP. And so you would expect to see different prices across the globe as we move forward based on what tiers these countries fall into, similar to what you see with our other molecules as well thanks.

Thanks, Ramona. Ken, any follow up?

No. That was very comprehensive. Appreciated -- appreciate the whole team.

Great. Okay. We can move on next question, please.

[Foreign Language]

[Interpreted] This is Wakao, JPMorgan. I have 3 questions about narcolepsy. 994 Part A dose setting, I have a question about this. Dose escalation study. So compared to Part B, you would begin from lower dosing level. So what is the dose that is used? That's my first question. Second question, about 994, cataplexy frequency, WCA. On Page 61, you showed that similar to 295, cataplexy 0, so this is a huge reduction. And can we expect the same from 994? MWT and the cataplexy, you said that there's correlation between the 2. So based on the result of Part A, what is the outlook? That's the second question. Third question is about 861. 861 preclinical data, is this at the same level as 925 and 994, as good? And I know this is long-acting, but is this going to be once-weekly or once monthly? What is the nature of long acting? And the target, this is the same, NT1 1, NT2, just like 994? Or is it different? That's all.

All right. Thank you very much, Wakao-san, for the questions. Elena, all 3 will go to you. The first is on the choice of dose for Part A of the 1501 study. The second was on the cataplexy frequency and Part A of the 1501 study. And then the third was regarding the preclinical profile and the strategic intent around TAK-861.

Yes, Wakao-san, thank you for your questions. All very good questions, the ones that we are also thinking ourselves. So first of all, you are correct that both Part A and Part B in our study, TAK-994-1501 were dose-escalating studies. We we had -- we made certain assumptions based on the Part A data, and we are testing these assumptions in terms of doses in Part B. As I mentioned throughout the presentation, we try really to optimize the potential transformational efficacy that we expect for this product given the ability to treat the underlying disease and basically make people feel normal again. We try to maximize that efficacy while minimizing any safety events. So this -- we try to find the sweet spot between that efficacy and safety. So we can -- as a result, we try different dose levels. And while we are not able to disclose those today, stay reassured that we have already evolving data from Part A that help us with dose selection. And we are also been informed by our preclinical -- by clinical data with TAK-925, which brings us to the -- to your next question about weekly cataplectic attack rates. Again, we cannot disclose this information based on Part A. But you're correct in thinking that we should be expecting the same level of transformational efficacy in all end points that affect patients' lives, and that is MWT, which we try to really return them to almost normal as well as weekly cataplectic attack rates as well as how they feel the subjective measurements of sleepiness. So we are very encouraged from the Part A data. And you should be encouraged as well. But again, you would need to be a little bit patient for us to be able to complete the study, to show this data collectively over a longer period of time. This will be better data to disclose to you as well as to the scientific community in an attempt to bring this product to patients as quickly as we can. And then finally, on TAK-861, we are very excited that we now have, beyond TAK-925 IV, the first oral TAK-994 additional compounds TAK-861, potentially longer-acting oral agonist entering the clinic. This first study, we filed, by the way, the CTN, the clinical trial notification in Japan last month, and we will start our Phase I study very soon. Will be very important to understand exactly that, what will be the PK profile. And that would help us really position this compound as a follow-on to TAK-994. And that will also help us understand what is the potential in terms of indication, expansion. It could be a follow-up to in sleep-wake disorders or it could be in different indications given that Orexin enhances the potential in a broad spectrum of diseases, sleep-wake, respiration and metabolism. So we will have to first evaluate the PK and the safety and then we will position this compound within your overall Orexin franchise for an optimal use, if you like, always in disease with high unmet need. Thank you for your question.

[Interpreted] Do you have any paper or plan to present the data for 861 at a Congress? Or do you have any reports?

So TAK-861, again, is a little bit earlier in its lifecycle. We are -- been starting the first-in-human study. As a general practice, we would like to disclose our data, preclinical and clinical data, if you like, together. So independency of the data availability, we will make the publication plans, and we will be happy to share this data in future events. Thank you.

[Foreign Language]

[Interpreted] This is we Ueda, Goldman Sachs. I'd like to ask a question -- 3 questions actually on 994. First is due to repeated dosing, are there any resistance data at your hand? If any, please let us know. And 4 weeks duration is efficacy decreased? Or in mouse studies, didn't you see any resistance to the treatment? The second question is that in CSA regulated substances, how this compound is positioned? What is your view currently regarding the dependence or addiction. Is it classified as a regulated substances or not? And probably, I think the current narcolepsy treatment are classified in 224. And what is your view on the positioning of 994? The third question is regarding the revenue potential. And in the previous question, you also answered, and I also think that you would expect broad indications. Regarding Orexin-related sleep disorders, can we expect that you'll be able to get an indication in very broad term? And concerning this potential, the revenue potentials around when we'll be able to get more specific information.

Thank you very much, Ueda-san. I counted 4 questions, but I think that's okay. The first -- most -- Elena will go to you. And then maybe Uthra, the question regarding revenue potential, I'll throw to you since you've talked already about some of the projections and forecasts we have for our Wave 1 assets. First question was about tolerance or what Ueda-san termed as resistance both in preclinical models and in the clinical 4-week study for 994. Second question was regarding whether we think this will be considered as a regulated substance. And then the third question was around whether we think we could get a broad indication in sleep disorders. Maybe start with you -- yes. Sorry.

Yes. It's okay. Ueda-san, thank you for your questions. These are important questions that we are also looking throughout our clinical development plan. So we are quite encouraged from Part A 4 weeks data. We have seen a good efficacy over 4 weeks, which is the longest duration, if you like, we have been tested and Orexin agonist, and particularly in oral Orexin agonist, which is, as you can appreciate a huge achievement for the field, not only to finally have an Orexin agonist, but be able to dose patients up to 4 weeks duration. So the data that we -- that the independent review committee reviewed were very encouraging and led, if you like, to the extension of the study into Part B, where we will be testing 8 weeks duration. We would -- we hope that we will continue to see the consistent efficacy result we see in the early part of the study. However, it's still, again, early days. We should not make definitive conclusions about the duration of treatment. This is also why we try different doses, going back to the dose question, to be able to maximize the efficacy for the majority of the population, if you like, across the 8-week treatment, which is the regulatory time frame that we need to conduct our studies and hopefully will translate into a benefit for patients in the marketplace. So again, the clinical data always trump preclinical data, and I have to say the clinical data are very strong both on the 925, the 7 days data, and now the 994 over 4 weeks of treatment. We are very encouraged. Now a very important consideration is obviously the addiction. And again, here is where we feel that we may have actually an advantage with TAK-994 as with TAK-925 given that this is a very selective Orexin 2 agonist as opposed to Orexin 1 receptor agonist. And we -- the Orexin 1 receptor is implicated in the reward system, where the -- whereas the Orexin 2 agonist, we believe is not implicated in the reward system. However, we have to do the appropriate clinical studies to show that, and we are in the process of doing that. And as a result, we will know for a fact as whether we will be a classified substance. But our expectation is we will not, given the excellent preclinical selectivity Orexin 1 receptor versus Orexin 2 receptor. And I would like now to pass on to Uthra for the -- our revenue question. Thank you.

Thanks, Elena, and thank you, Ueda-san, for your question around potential revenue potential. So right now, as Erika mentioned, our focus is really on narcolepsy, starting with type 1 and then moving on to narcolepsy type 2 in idiopathic hypersomnia. So we have projected around $3 billion to $4 billion for peak revenue for narcolepsy type 1, which is going to be our biggest indication, followed by $1 billion to $2 billion for the 2 indications, which is NT2 as well as idiopathic hypersomnia. And your question on broad indications, I think this is where the science will drive our decision-making. As Elena mentioned, we are looking at the PK profiles. We're trying to understand the different diseases but also trying to understand what is the best profile that will actually help us bring something that's transformative. We want to make sure we're going in areas with high unmet need but, more importantly, we want to bring in transformative therapies. And so we have to really have that perfect match between the molecule and the disease. And so we target this in a way that really helps us raise the bar on outcomes and as we think about broad indications. So that's something we're going to continuously explore, but it's going to be driven by a very scientific approach as we really uncover more data, as we understand the PK profiles and what's been required to treat some of these tough diseases. So hopefully, that answered your question.

Okay. Thanks, Uthra and thanks, Elena. I'll just add Ueda-san, it's a really important question regarding tolerance, and it's always a question that we have when developing an agonist, which can drive receptor, down-regulation and loss of pharmacology, loss of efficacy over time. So just to restate what Elena has said, we have no evidence of sensitization or tolerance, preclinically. And we -- and up to 4 weeks now in our clinical studies, we haven't seen evidence of that either. Of course, we need to continue to see what happens with longer-term dosing. But right now, it looks quite good.

So we'd like to move on to the next question.

[Interpreted] About TAK-994 Orexin. I have 3 additional questions. The first about the future development plan. After the Phase III study, you move on to filing an approval with past medications. However, you expect about the Phase II study and using that data, will you be able to file and ask for approval? Can you talk about the situation surrounding 994? And about the convenience and about the risk for AEs. At the -- when the patients need to take this medication, with meal or without meal? So can you talk about convenience or when to take this oral medication? And about nighttime insomnia, about the AE risk, can you please explain? I think this is a stimulant, neurologically. So I think there are risks to deteriorate the quality of sleep. So can you talk about that as well? And my third question, how it is going to be used in the market. There are a number of pharmaceutical medication that has been approved. Is 994 going to be a monotherapy? Or is it going to be used concomitantly? Thank you.

I think, Elena, can take the first 3 around whether you think the Phase II study could be used for approval, the convenience around food -- of dosing around food intake, potential for nighttime insomnia. And then Erika, if you could take the last question around competitive market positioning.

Thank you for your questions. With regard to the next steps after our Phase II study and as we advance our regulatory efforts, I discussed today that we are going to use the Part B of 1501, the dose-ranging Phase IIb study 8 weeks duration as a supportive study to our regulatory program. We are approaching -- we will be approaching the health authorities with the Part A data to discuss the requirements for registration. We expect that these discussions will be quite relevant to inform on the Phase III design, which we will be expected to complete in order to, if you like, to secure approval. In addition, we are also discussing with payers because we would like to provide the broadest access possible for this important medicine in narcolepsy type 1. So the payer requirements are important to be factored into our development plan. So with all of that, while we are quite certain that Phase IIb will be supportive of the regulatory path, we expect that additional studies have to be completed, and we will be discussing this with health authorities, and we will be updated -- updating you on our regulatory plans once these discussions have been -- have occurred. Now with regard to the question about convenience and how exactly is going to be used in the marketplace. As you can imagine, we are conducting all our drug-drug interaction as well as clinical pharmacology studies to be able to support the label and provide the instructions for patients and physicians how to best use this product. It is too early to conclude on those instructions. However, stay reassured that we're looking very carefully to optimize, if you like, the convenience how this product can be taken in order to ensure maximal efficacy and, again, reducing any inconvenience issue or safety concerns. The third question about nighttime insomnia, and I realize this question has been asked before in a different way. It's an important consideration and an area we look very carefully in our clinical program given the mechanism of action for Orexin agonist. First of all, let me go a little bit back and reassure you that this is a truly novel mechanism of action, treating the underlying deficiency in narcolepsy type 1, which is caused by the loss of Orexin due to the depletion of the neurons in hypothalamus. It is not a stimulant. This is a very important, if you like, separation from what is on the market. So therefore, I think we cannot assume that we will be having the same safety profile as other products. However, because of the potential for Orexin 2, if you like, almost restore the Orexin depletion, we need to look to ensure that the residual Orexin, if you like, to not cause insomnia during sleep. So that is an area of focus. We're doing the appropriate analysis to your clinical study. These data are not available today and will be available and presented in conjunction with the analysis from Part A and Part B at the end of the study next year. Is there anything -- anyone would like to add? No? And now, I would like to turn to Erika for the mark for the commercial question.

Great. Thank you for the question. So if approved, TAK-994 oral Orexin agonist would be the first to treat and target the underlying cause of NT1. So as we discussed earlier, the current treatments today don't address the Orexin deficiency. And we know that patients are not currently controlled on therapy. We know today that most patients are actually on polypharmacy. So your question around what our intention is and what we hope for with TAK-994, indeed, we actually are targeting for it to be a monotherapy, addressing the pentad of symptoms. So we're very excited about the transformational efficacy, and we're looking forward to changing how NT1 is treated. Thank you for the question.

[Foreign Language]

[Interpreted] This is Hashiguchi speaking. I have 3 questions. First question is about Maribavir. First-line Phase III study, why only post hematopoietic stem cell transplant? By focusing on that population, compared to -- if we include SOT, how much reduction do you think -- additional reduction do you think we'll see? Second question about Soticlestat. Phase III is addition to standards of care. [ Calado, Ben foramen ], they are included in the standard of care. And once approved, can they be combined with Soticlestat? In other words, if a combination therapy is not possible, [indiscernible], how do you differentiate Soticlestat against that? Is it mostly about safety? And the third question is about Page 11, timing of approval. This is a time line along the horizontal axis. EOA, Eohilia seems to be far to the right. Last time, in February, your guidance said that the calendar year FY '21, first half, we can expect approval for this product. But does this mean that now there is a potential for delay? Those are the questions.

Thank you very much, Hashiguchi. I'll start with your question on Slide 11, then I'll ask Obi to talk about Maribavir first line study. And then Sarah, you could talk a bit about the plans -- Phase III plans for dosing of Soticlestat on top of standard of care. So with respect to this side, Hashiguchi-san, let me apologize and just reframe this. This is -- this does not highlight time lines for approval in the U.S., Europe or Japan. This is for emerging markets. And the intent here was to show that essentially all of our innovative products, our intent, for all of them, is to deliver them to patients across the world, including China. We still have an earlier slide. You see our pipeline. You should follow those for first approvals in major regions. Thank you. Obi?

Yes. Thank you, Hashiguchi-san. Yes, what I -- I think I want to start answering your question by going back to the breadth of our clinical trial. So in our Phase II studies, we conducted 2 defense studies. One in first line treatment and another one in second line treatment. Both of those studies included both patients with hematopoietic stem cell transplants as well as solid organ transplant recipients. So in the Phase II program, we had clinical experience in both first line and second line as well as in both solid organ and stem cell transplants. The Phase III study, again, was a second line infection study. Again, enrolling solid organ transplants and stem cell transplants. So your question is why did we focus the second Phase III study on stem cell transplants alone. That is because that's the area of highest unmet need in terms of first line treatment infection and also the area would like to accumulate information. Before the approval of letermovir, there was nothing for patients who had stem cell transplants because the drug, ganciclovir, are very toxic and don't work well. The neutropenia that ganciclovir brings about don't work well with the stem cell transplant situation. So there was a high unmet need, no prophylaxic agent at the time we started. And even today, no treatment agent. So that's the reason that we chose to do the study focusing it on stem cell transplant recipients. But what I'm very happy about is the breadth of data that we have, starting with our Phase II and our Phase III studies and starting with first and second line patients.

Hashiguchi-san, this is Sarah. Thank you very much for asking the question about Soticlestat. We're very excited about the potential of Soticlestat as a treatment option -- potential treatment options for patients with difficult to treat seizures. You are correct that in Phase III, as in Phase II, Soticlestat will be added on to standard of care. And we will allow patients into the study who are on Fenfluramine or Epidiolex of any other approved epilepsy treatments for that matter. When the Phase II study was conducted, fenfluramine wasn't as yet approved and so there were no patients on fenfluramine in the Phase II study. However, Epidiolex had just been approved in some jurisdictions, and so 10% of patients in the study were actually on Epidiolex. And the combined treatment effect showed great efficacy as well as no concerns about safety and tolerability with that combination. So in summary, we really expect the great benefit of this drug not just to be the efficacy that we shared with you today, but also the emerging safety and tolerability profile with low-risk of drug-drug interactions, the need for medicine adjustments or safety monitoring when adding an additional antiepileptic drug to standard of care in fragile pediatric patient populations. Thank you for the question.

[Interpreted] There seems to be more questions. So we'd like to extend the time a little.

[Foreign Language]

[Interpreted] This is Sakai, Credit Suite. I am aware of the time so I'd like to be brief. I have 3 questions. First about Soticlestat. In last December event, peak potential revenue was not disclosed. But this time, you mentioned $400 million to $500 million, did you say? What is the basis of these numbers? I think it's not just because it was a shift to Phase III, but there are some I think assumptions or forecast that you have as a basis of those numbers. And what I am struggling to understand is Page 63 table, the preclinical data is shown here. What is the meaningfulness of this? 925 and 994, the efficacy may be comparable. This uses MTO model, mice. Is it Takeda's unique model mice? And I think it's not just simply showing the efficacy. But are you going to interpret some promising information regarding the outlook of 925. It's an interesting data, but it is also puzzling. So I'd like you to clarify this slide. And Page 9 table, about 186 [ ECFO ] that's shown on the extreme right. I thought that this is a Wave 2 compound. And what is the next data disclosure time point of this compound?

I'll take the first one on TAK-186. And then Erika, I'll ask you to talk a bit about the assumptions that go into our peak sales forecast for Soticlestat. And then Elena, back to you for preclinical data on the Orexin program. So Sakai-san, TAK-186, as I'll remind you, is the first bispecific that's coming from the Maverick Co growth platform that's going into the clinic. It just went into the clinic recently. Right now it's hard to predict time lines. Don't look at the fact that it's far over on the pipeline chart to suggest anything other than, at this point, our base case for this program. If it's successful, is for an approval of launch sometime in the Wave 2 time frame. But we'll have more data as that program advances in the clinic. Erika?

Great. Thank you so much for the question regarding our peak revenues for Soticlestat. So want to just highlight that yes, indeed, we've shown $400 million to $500 million for peak revenue, and that's based off of having a DS and LGS indications. The current standard of care of therapies do vary by indications and varying approvals across the globe. We also realized it because the significant unmet needs and other refractory epilepsy medications, they may be used off-label. So we're really representing today our forecast based off of those 2 indications, DS and LGS. And we think that there is a lot of growth opportunity here because of the fact that 80% of the patients are still not controlled on current treatments. Thank you for the question.

Yes. Sakai-san, thank you for your questions. And you are indeed correct that we used the preclinical data for both 925 and 994 as an extremely important predictive tool to help us with -- to understand the potential for efficacy as well as pharmacokinetic and pharmacodynamic evaluation. We -- so as we discussed throughout the presentation, it was not easy to develop an Orexin agonist. So this was the first hurdle that we had to resolve. And that led us to TAK-925, which was an IV formulation, which worked extremely well in patients. However, it is somewhat limited due to the formulation. Therefore, we wanted really to advance the field within oral Orexin agonist. So what we did, what we show in this slide is we use the exact same models for cataplexy as well as wakefulness. These are not Takeda-specific models. These are typical models that one might use for this -- to investigate this population. And although they are not identical because there are 2 different compounds, 2 different formulations, directionally go to the exact same place, which is that we show the increased wakefulness and the reduction of cataplexy. So now, again, IV formulation versus oral, we use this preclinical data to guide the dose selection for our clinical experience. And we are quite pleased how translatable this preclinical data, where, in clinical evidence, both for TAK-925 and now for 994. So that this is, again, a testimony to our phenomenal capabilities, both from the discovery and development perspective to be able to predict and implement, if you like, this information into our clinical design and to get us where we are today. So the outlook is for both compounds is very promising. And again, we try to optimize those and to maximize efficacy and safety throughout their program to come, if you like, to the most optimal solution for those patients. Thank you for the question.

[Foreign Language] We will entertain a few more questions.

So if you, please.

Steve?

It's Steve Barker from Jefferies. 3 questions. Firstly, regarding R&D spending. If you could comment in general terms about the appropriate level of spending for an R&D-driven company. I think the industry standard tends to be about 20% of sales. So if you do, do you have any comment on what the appropriate level of spending for Takeda should be, that would be appreciated. Moving on, regarding TAK-861, the fact that you've decided to enter this longer-acting agonistic trials, should we view that as some sort of a mission that you don't think that TAK-994 is long-acting enough? And then a related question, what are the safety or tolerability trade-offs that might accompany the longer action of TAK-861?

Steve, maybe I'll just take the last 2 questions. And then Christophe, I'll hand it -- I'd be very interested to hear your answer, Christophe, to what the right extend is for ticket R&D. I'll hand that off to you, Christophe. So Steve, we absolutely believe TAK-994 has every potential to be our first therapy for hyponarcolepsy. Absolutely. And relative to your question with regard to trade-offs, that's something that we'll just have to understand as we start to understand more about the PK/PD profile, the efficacy and the safety. So there's still a lot to learn. But we -- don't mistake, we believe that TAK-994 has an outstanding chance of making it all the way to patients. Christophe?

Yes. I mean, of course, we are an R&D-driven company. So we need to invest in R&D, but we need to invest in a very efficient manner. And we believe that our R&D model is very efficient and is very productive because of what Andy showed at the beginning, we are focused by therapy area, we are partnering a lot. So we have our own internal lab. But by partnering, we do some risk sharing, and we don't invest by ourselves on every technology around there. So on the other hand, of course, we are a large company, so we need a significant pipeline to grow because we want to be an R&D-driven company, but a growth company. And for that, we need a sufficient pipeline. So we'll continue to invest to make sure that we have a pipeline sufficient to grow in the future. And to grow in a competitive manner and to reach our JPY 5 trillion target in 2030. But we do believe that with our R&D model, we can be more productive than the average of the industry.

[Foreign Language]

[Foreign Language]

[Interpreted] Hello, can you hear my voice?

[Interpreted] Yes, we can hear you.

I'll try to keep it brief. Soticlestat, outside of DS and LGS, are you still developing for other indications? And on Page 6, cell therapy and also gene therapy and beta science lined up together. Is this data science for increased efficiency for R&D? Or is data science actually a form of therapy? Is that what Takeda is trying to do. So those are the 2 questions I have.

Thank you very much, Mizuno-san. I'll take the first question. We're not developing digital or data sciences as a primary business. We're building a foundational capability in data digital to enable our drug discovery, drug development, medical and commercialization activities. And then the Soticlestat question -- sorry, Sarah, I'll hand that to you.

Thank you, Andy. Mizuno-san, absolutely. So LGS and Dravet are the initial lead indications. And our immediate focus is on delivering and developing in these 2 indications as quickly as possible. But the mechanism of action should work in other seizure indications, and this is something that we will be entertaining subsequently. Thank you for the question.

[Foreign Language] That concludes today's meeting, and thank you very much for your continued support in advance.

Thank you for your taking time, and that concludes today's conference call. You may now disconnect your lines. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]