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

Yes. Thank you very much, Chris, and welcome, everybody. Thank you for joining us at such an odd hour, Saturday night for those here in the U.S. and Sunday morning in Japan. And thank you for taking [Technical Difficulty] Yes. Can you hear me now, Chris? Terrific. I was just highlighting that we are coming off of an incredibly successful 2022 for Takeda R&D with really terrific momentum. I just wanted to share a few of the highlights. Our dengue vaccine, QDENGA, was approved in Europe and in a number of endemic countries. And we had our filing at the FDA accepted. We had 3 Phase III study readouts that came out quite successfully: TAK-755 in TTP; ENTYVIO for graft versus host disease, where we just presented data at ECCO, very well-received; and the compound, the VEGF receptor inhibitor, that we just acquired ex-China rights from HUTCHMED, fruquintinib, which is approaching filing in the U.S. very shortly. And then our mid- to late-stage pipeline showed great momentum. We had TAK-999 presented terrific Phase IIb data; and we're, very short order, planning to start our Phase III study in alpha 1-associated antitrypstin liver disease. And then, of course, our orexin program, our next-generation oral molecule TAK-861 started Phase IIb studies in type 1 and type 2 narcolepsy. We are very excited about the momentum in our pipeline. And I must say there isn't a molecule that we're more excited about than the one that you're about to hear from Graham Heap, and that's TAK-279, our selective TYK2 inhibitor. And with that said, I'd like to hand it over to Graham Heap, who's the project leader for this program. Graham is one of our top physician scientists, and I can't imagine a better person to lead this very exciting program. So Graham, I'll hand it over to you.

Thank you very much, Andy. So it's my pleasure to begin this presentation of TAK-279. So if I can go to the first slide. So TAK-279 is a highly selective oral allosteric inhibitor of TYK2 that demonstrates high selectivity over other JAK family members. This selectivity is achieved by targeting a particular domain of TYK2 called the JH2 or the pseudokinase domain, ensuring that TAK-279 does not bind to corresponding part of JAK1. Essentially, what this means is that clinically relevant doses, there's no inhibition of either JAK1, JAK2 or JAK3. Next slide. TAK-279 was tested in a Phase IIb double-blind, randomized placebo-controlled trial in patients with moderate to severe psoriasis. You can see the standard eligibility criteria on the right-hand side. Patients were required to have plaque psoriasis greater than or equal to 6 months, a PASI score of greater than or equal to 12%, a PGA score of greater than or equal to 3, and a BSA greater than or equal to 10%. Patients were randomized to 1 of 4 active dose groups, 2 milligrams, 5 milligrams, 15 milligrams or 30 milligrams of TAK-279 Q daily or placebo. Patients were treated for 12 weeks with a 4-week safety follow-up. Patients were equally randomized 1:1:1:1, and the primary endpoint was at week 12, which is PASI 75. Next slide, please. So I'm showing here the disposition of subjects. Subjects were equally balanced across all the treatment groups. The most common reason for discontinuation was lost to follow-up. This is relatively standard for this type of program. The randomization aimed for 50 subjects per group. And you can see this was achieved with balanced randomization across all treatment groups and placebo. Next slide, please. The demographics and disease characteristics of the enrolled population were consistent with a moderate to severe psoriasis population and comparable across all the treatment groups. It's worth highlighting a couple of factors about this patient population. So you can probably note the bioexperienced population is still slightly lower than some other Phase II trials. However, I think it's worth noting that this doesn't traditionally make a significant impact on patients' efficacy in psoriasis. Disease severity as judged by PASI, was perhaps slightly lower than some other Phase II trials; however, again, this change was minor, and it's unlikely to have a significant impact on the interpretation of the results. The BSA and the PGA are relatively standard for this type of trial. Next slide, please. So here, I'm presenting the primary and the key secondary results. The primary endpoint of PASI 75 was achieved with statistical significant differences between TAK-279 subjects and placebo at the 5-milligram, 15 milligrams and 30-milligram doses. It was a [indiscernible] significance. Importantly, on the key secondary endpoints at PASI 90 and PASI 100, we saw increase in response rates in the 15 milligrams and the 30-milligram groups. And this is what we hear over and over again from patients. They want clear skin. It's what treatment goal is driving towards. In the 15-milligram group and the 30-milligram group, we have 5 out of 10 patients, almost 50% of patients achieving PASI 90. And at 30 milligrams, 3 out of 10, 1/3 of patients achieving PASI 100 or clear skin in 12 weeks. Next slide, please. And I think it's important to think about what this means for patients. So I'm showing here a representative image of a patient with plaque psoriasis on their lower limbs. This is a patient who [indiscernible] TAK-279. They received 30 milligrams daily for 12 weeks. You can see raised resolutions at baseline. By week 4, these have started to reduce. And by week 12, they're completely resolved, leaving only some mild hyperpigmentation, which is common when treatments are effective in psoriasis. Next slide, please. In recent Phase III trials, there's been a co-primary endpoint reflecting a physician's global assessment, in addition to PASI. In this trial, a global morphologic physician assessment was performed. Rates of PGA 01, which was also a key secondary endpoint, showing nice dose response with increasing rates of clear skin at higher doses. Around 50% of the patients achieved a PGA of [ 0 ] at the 30-milligram dose and a post-hoc analysis was performed at PGA 0, which demonstrated around 1/3 of patients achieved a global morphologic PGA of 0, reflecting similar results to those seen with the PASI scores. Next slide, please. In addition to efficacy, it's important for us to think about the safety of these agents. So this is a high-level view of the adverse events seen in this trial. There were no deaths. One patient in the 15-milligram group experienced 2 adverse events, which were deemed not related to the study drug. These 2 events were pleural effusion and pericardial effusions. Adverse events were numerically higher on drug compared to placebo. However, most were mild to moderate. Adverse events leading to discontinuation were low and comparable across all treatment groups. There was no clear dose response to any reported adverse event. The most common adverse event was COVID-19 infection. However, there was no dose response across the COVID-19 infections, and all reported events were low to moderate grade. The rates were slightly higher on treatment compared to placebo. There were no discontinuations due to COVID-19. There were 3 treatment interruptions, and none of the events were considered related to study drug. There were no serious, severe or opportunistic infections. There was no dose response to diarrhea. All cases of diarrhea were mild, and no treatment or study discontinuations resulted from diarrhea. There is perhaps a slightly increased rate of acne or acneiform dermatitis at the higher treatment groups, but rates remained low, and all cases were mild to moderate. It remains to be seen whether this is related to TYK2, but it's worth noting that all but one of these patient symptoms had resolved by the time the study finished at week 12. Next slide, please. If we look at the lab events observed in this study, there were no changes in cell counts associated with any dose groups. There was no difference in Grade 3 events of neutropenia or lymphopenia between TAK-279 treatment with placebo. There were 3 Grade 3 neutropenia cases observed in this trial, one in placebo, one in 2-milligram and one in 30-milligram; and 2 lymphopenia cases, one in placebo and one in 2 milligrams. There were some sporadic increases in CPK in some groups, but there are only 3 Grade 3 or greater events, with one present in the placebo, one present in 15 and one present in the 30-milligram dose. It's important to note there was no dose or exposure relationship to CPK. No cases of renal damage, rhabdomyolysis or patient reports of myalgia were observed. Next slide, please. So in summary, the PASI 75 endpoint at week 12 was achieved with TAK-279 at doses greater than or equal to 5 milligrams, with 68% of patients on the 15-milligram dose, 67% of patients in the 30-milligram dose achieving PASI 75. Secondary endpoints were achieved with TAK-279 at doses greater than or equal to 5 milligrams. And we've heard over and over again from patients what they want is clear skin. And a great proportion of patients achieved PASI 100 or PGA 0 at the highest dose of TAK-279 at 30 milligrams, 1/3 of patients achieved this endpoint. Adverse events were generally low. COVID-19, acne, acneiform dermatitis and diarrhea were the most common treatment-emergent adverse events. As I noted, there was one patient with 2 adverse events at day 35, and there were a few patients with treatment-emergent adverse events leading to discontinuation. Overall, the efficacy and safety finding in this study supports the further study of TAK-279 in psoriasis. Next slide, please. So if we think about the next steps with TAK-279, we -- the high selectivity to TYK2 over JAK1 to 3 enables high coverage with once-daily dosing of TAK-279. The ability to achieve high target inhibition at top doses offers the ability to unlock a range of autoimmune diseases, with the potential to address a large number of patients. We have a Phase III psoriasis program that should initiate in FY '23. A psoriasis arthritis Phase IIb readout should occur later this year. In addition, we're looking at initiating Phase II trials in IBD, SLE and exploring other indications. Thank you.

[Interpreted] This is Seiji Wakao, JPMorgan. Can you hear me okay?

[Interpreted] Yes, we can.

My first question is the evaluation of this data compared to deucra, deucravacitinib. Looking at this data, do you believe that the 279 will be a best-in-class compound? Which aspect or part of the data made you believe that your compound is best-in-class? And if you compare deucra Phase II data, in my view, there aren't any major differences. But what are the key points that you believe that TAK-279 will be the best-in-class compared to deucra. That's my first question.

[indiscernible] and if you could ask all of your questions and then we can distribute them to the appropriate person on the panel.

[Interpreted] Then second question is Phase III study dosing. The top dose was 30-milligram. And is my understanding correct that the top dose in Phase III will be 30? Or do you have an idea to go beyond 30-milligram in Phase III trial? These are 2 questions I have.

Okay. Thank you, Wakao-san. So maybe, Graham, if you could take both questions, why we believe we have a best-in-class based on the Phase IIb data and then the dose for Phase III.

Of course. Thank you. So I think first of all, TAK-279 is a highly selective small molecule, which we believe has a potential best-in-class profile with a compelling combination of safety, efficacy and convenience. We're particularly encouraged by the skin clearance rates in the Phase IIb psoriasis study and the majority of patients treated with TAK-279 in the higher dose arms, which PASI 75 and a significant portion reached PASI 90 and PASI 100. We believe the portion of patients achieving PASI 90 and PASI 100 already at week 12 is particularly encouraging. And we know that achieving clear or nearly clear skin at PASI 90, and importantly PASI 100, is increasingly recognizes the therapeutic goal in psoriasis. We think this recognizes the patient's perceptions as they hope what they can achieve on the therapy is clear skin. Importantly, these compelling results were achieved without compromising safety or tolerability even at the highest doses in the study. On the Phase III program, Obviously, we are in discussions with regulatory agencies over the coming weeks and months, and we'll be reporting more information on what the dose and the study design of those studies will look like as we complete those discussions.

[Interpreted] PASI 100, the highest response rate is 33%. It is higher than that of deucra. So that is the key point that you consider that yours is superior than deucra. Is that understanding correct?

I think we are particularly encouraged by the PASI 100 response rates. It's difficult for us to do cross-trial comparisons with any other agents. But I think if we look at the rates that are currently seen in the TYK2 label, we believe this offers a compelling proposition.

[Interpreted] About Phase III psoriasis study, how you plan to go ahead with the study. Maybe you answered the question already with the previous question, 30 milligrams or over, is that the dosage you're considering at the moment? That is my question. And against TYK2, are you thinking of conducting a head-to-head study against TYK2? So that is about psoriasis Phase III study. My second question about IBD Phase III study. IBD Phase III study, are you thinking of conducting it? No, it's IBD Phase II, correct? So are you going to do it mainly with 30 milligrams as a dosage? Or are you going to be proactive and add more higher doses? That is my question.

Thank you, Muraoka-san. Maybe, Graham, I'll start and then I'll hand it over to you, and you can talk a little bit about our plans at this point for the Phase III psoriasis study and then our plans for indications beyond down psoriasis. So as Graham presented, we feel very confident that the 30-milligram dose has an efficacy profile that can be best-in-class with a tolerable safety profile. So we can't tell you exactly what our dose is going to be today because we need to go through a process with agencies before starting that study. But if you do your own prosthetic comparisons between our Phase IIb and the deucra Phase IIb, you see that there's -- again, all the caveats of inter-study comparison, there's clear separation of the PASI 100 at 30 milligrams. And the reason that we brought this program in is we really believe that we have a best-in-class agent in psoriasis and other indications. So we're looking very closely at the 30-milligram dose. Graham, I'll hand it over to you.

Thanks, Andy. And I think in terms of the Phase III psoriasis program, as Andy said, it's going to be the subject of discussions with regulatory agencies in the coming weeks to months. I think a head-to-head trial in psoriasis has become relatively common. In our IBD program, I think we are very confident in the profile of the asset. We know that in IBD, traditionally, those high levels of target inhibition and exposures matter. So we'll be exploring a range of doses in our IBD trials to ensure we can demonstrate the full benefit of the asset. Thank you very much.

[Interpreted] This is Hashiguchi, Daiwa Securities. I have one question about the safety. Overall, common infections are not observed, I think, in these study results. However, COVID-19 infections are more reported compared to placebo in active groups. So what is your observation? How do you interpret this data?

Graham?

Yes, I think we agree, COVID-19 infections were present, more common on treatment than they were in placebo. If you think about the mechanism of action of the drug, anytime you inhibit cytokine, you're likely to see increases in viral infections. We think these were mainly mild to moderate infections. We saw no hospitalizations in patients who recovered with standard of care or with no therapies. So we think -- we hope it replicates as we continue to study this in Phase III.

Could you expand a bit Graham on the timing of the study relative to the pandemic?

Sure. Yes. And I think if you think about the results of this study, when it was conducted, we were in the height of the COVID-19 pandemic. So there was a lot of COVID-19 present in the U.S. and Canada at the time this study was being conducted. So I think it's not surprising that we saw a large number of COVID-19 events in the program in totality [Audio Gap]

Good morning, Yamaguchi-san. Graham, I'll take the first question, and I'll hand the second question on time course over to you. So -- because there's a lot of interest in our choice of dose, so we have to still go through a process with agencies to agree on a dose. We feel we're quite compelled by the data with the 30-milligram dose. And so we would be -- it wouldn't be unlikely that we move forward with the 30-milligram dose. There certainly are examples in drug development, and we have this with ENTYVIO, for example, where you have an induction dose and then a maintenance or where you have a drug that has monitorable toxicities where you dose titrate, certainly in oncology are very common. I think that would be highly unlikely in this program for us to have a regimen where patients would have to come in with different doses. We can't, of course, [ add ] anything out at this point, but it feels based on the pharmacokinetics and exposure of this drug. It's a very, very well-behaved once-daily oral molecule with terrific coverage of TYK2 across the 24-hour period. And the safety profile, as you're seeing, that suggests that doses up to 30 milligrams is quite tolerable. So again, we still have to go through a process here over the coming several months. But it would be unlikely to have a regimen that requires dose adjustment.

And just on the time course, obviously, we haven't disclosed publicly the details of the time course of psoriasis trial yet. We do hope to do so at a future medical meeting. I think all I can do at the moment is refer you to the single example of the end of one patient we had in our presentation. I think this is a patient with lower limb psoriasis, which traditionally has been relatively difficult to treat. By week 4, you can see that they're already achieving visible improvement in their symptoms. And I hope we can share more details of this in the future. So this only treats people out to week 12. We haven't presented the time course in the first week 12 data yet. And again, we'll present that in the future, thinking about after week 12. In general, with other regions, you see response rates continue to increase during the trial and continue to increase for a few weeks after. We hope during our Phase III program, we can demonstrate that, and then beyond that, hopefully, demonstrate maintenance of dose responses. But we'll have to wait for the Phase III trial to see that data.

So creatine kinase safety and neutropenia, Graham.

Certainly. Thank you. I think the neutropenia to start with, we saw no difference between active and placebo groups in rates of neutropenia. CPK, we saw mild fluctuations in CPK and then we saw some sporadic Grade 3, Grade 4 elevations in CPK over time. We don't know whether this relates to TYK2 activity or not, but we saw rates that were consistent between active and placebo. We didn't see any cases of rhabdomyolysis, which is what people worry about when you see elevations in CPK. So I think at the moment, most of those were driven by outliers. And that's something we're going to keep a close eye on going forward. So..

And then the neutropenia, there's a question about the neutropenia as well, Graham.

Yes, the neutropenia, so we saw no difference between active and see the ones in the rates of neutropenia that we saw.

[indiscernible]

Again, just 2 questions, correct, Sakai-san? Okay. Well, good morning, Sakai-san. And thank you for the questions. I'll say before asking Uthra to step in that both Uthra and Graham have been a part of this project for the last year plus. So we've been engaged in deep conversations with Nimbus about this molecule for quite some time. And we've done extensive assessments of the landscape, given our presence in IBD with ENTYVIO. And we've been, for the past 8 years, looking for a molecule that we think would be a molecule that we want to have next to ENTYVIO in our GI and inflammation portfolio. And this is the first one that we made the decision to go after. You said the Phase IIb data were okay in psoriasis. We actually don't think they're okay. We think they're quite phenomenal when you look at the safety and efficacy profile. So we're very excited about it. So Uthra? No, it's okay. I'm smiling [indiscernible]. I would say in that. So Uthra, maybe you can talk a little bit about the overall kind of commercial strategy in psoriasis, and then perhaps talk a little bit about the -- our intent across other diseases and the different scenarios in terms of what we think we could achieve.

Yes. Thank you. Thank you, Sakai-san, for your question. I'll step back and say, as you look at, and I'll go with Andy's excitement around what we have seen in the Phase II results, and I'll share that same excitement. If you really look at psoriasis space, and both Graham and I are actually sitting here in New Orleans at AAD, and we've been hearing a lot about all the different molecules that are currently being used to really address the challenges around psoriasis. And what's becoming very, very evident is there's a shift from PASI 75 to now talking about clear skin or near clear skin. That's becoming the new standard for patients. It's becoming a new standard for physicians. And so as we think about really a transformative therapy, an oral therapy at that, really having an opportunity to really move towards clear or near clear skin is a big benefit for patients and physicians. And we've heard that consistently in market research as well. And then the quality of life we've seen also improved. As you think about moving from 75 to a 90 and 100, there's definitely a remarkable improvement in the quality of life for these patients as well. And what encourages us is the scientific community together with treatment guidelines, the Psoriasis Foundation coming up with really ways to achieve near clear skin or clear skin, the whole scientific conversation is moving away from just treating and improving really the symptom management to really getting to a place where, as Andy would say, a functional cure, where we can actually think about clear skin. And then finally, I would say, if you look at really the industry as well, we are also moving away as we think about end points. And so from a commercial perspective, this excites us because now we have a product that can be transformative. In an oral space, so you're looking at great efficacy, robust efficacy in an oral convenient product once daily, but also having the benefits of a safety profile, which is so relevant in this market. And we've seen that time and time again that safety plays a very big role as dermatologists actually engage and speak to physicians. And we've seen that with OTEZLA with very mediocre, the efficacy data are still doing well because there's some element of safety comfort. When I look at really how we prepare for launch, going to your question, it started already today. And we are working very closely with Graham and the R&D organization as we think about what's the right clinical development program that we put together around psoriasis, what are the end points, what's the additional evidence that's needed as we think about the value proposition for this asset so that we are thinking about broad access, deep adoption in markets globally. And so that work already begins now. I would say we've already started hiring both in the R&D function but also in the commercial space, really talent to understand the space, but also leveraging our internal talent, where we have launched successfully in IBD with ENTYVIO, where the market is extremely competitive, where we have actually launched in transplant where it was a new disease area for us where we've been able to understand the market dynamics and really have a fit-for-purpose model. And so that work begins now. So as we think about my role as really leading Global Product & Launch Strategy, it's really thinking about what is going to make us successful in this space. What do we actually leverage in terms of the scale that we have at Takeda, that's going to be a huge benefit, and then how do we bolt on the expertise that we need in this new area. So it's very exciting for us. We have an amazing transformative molecule. And now commercially, actually, it sets us up for success as we think about really the impact we can have for patients and physicians. So that's really the -- hopefully answers your first part of the question. As we think about your challenge to us on did we pay a lot for this asset, I would say no. As I think about psoriasis itself as a market, I think we have a huge opportunity to show leadership and be a best-in-class oral molecule. And I think that's going to be exciting. But it doesn't stop there. I think one of the big benefits of this mechanism is it can actually go beyond and really tackle other immune-mediated diseases. And so psoriatic arthritis is one area that actually would be exciting for us as well. As we think about IBD, still a market with huge unmet need and especially having an overall molecule with great efficacy will be a huge benefit. And the fact that we have a molecule that can -- where we can actually test the doses and possibly go, really experiment a little on the dose, gives us an opportunity to go beyond really what current therapies are really possible -- or have possibilities of achieving. And then you look at lupus and other indications that we might actually be looking at. You're looking at market potentials that are huge. I mean psoriasis itself is a $30 billion market potential in another 5 years. If you look at [ RA ], we're looking at a similar potential. And so you're looking at these are big markets where we will be playing in with a molecule that's extremely transformative, and that excites us. So our goal is actually to maximize the potential of this asset. So we are going to not waste any time as we think about all the different indications that we need to explore because we want to be out there fast, and we want to be out there actually leading the charge as we think about this new class of assets.

All right. I wanted to go back to your Phase III design and what comparator you're likely to use. You mentioned that using comparators head-to-head is common these days, but it didn't exactly tell me if TYK2 will be the comparator that you're going against or if it could be OTEZLA. I would think those would be your 2 choices. So if you could clarify, that would be helpful. And then second question, I think you guys have spoken to this in the past, and I think Bristol calls it out. When you move from Phase II to Phase III, often you see some regression in the data, some weakening in the efficacy. So I'm wondering if you can confirm that that's your belief for how Phase III might play out here and if you can at all quantify that. So would you expect that these results might get hair cut by, let's say, 10% to 20% or something like that.

All right. Thanks, [ Tim ]. So Graham, can you take both of those questions?

Yes. No, sure, certainly. So on the head-to-head comparator, I think as we've said, we're going to have to discuss with the agencies coming up. There's 2 kinds of studies we can do. There's registration studies and there's an additional studies that we can do thinking about access requirements. I think some of the registration program is going to be dictated by those discussions coming up. I think it's difficult for us to comment now on what that comparator might be. On the regression to the mean, I think you're right, it's a relatively well-known phenomenon when for some reason, the data in a Phase II trial can regress slightly in Phase III. I think as you look across the trials, there's a couple of things to think about. The first is this is a 12-week endpoint. Most Phase III trials have used 16-week endpoints. Traditionally, the effect rates that people have seen have tended to increase over time. We obviously don't know if that's going to happen with this agent, but most other agents have seen greater efficacy at week 16 and at week 12. So even if there is some regression, the 2 somewhat balance out over time. You also see less regression with the more clear endpoints. So if you look at PASI 90 and PASI 100, for example, they tend to regress to the mean less than PASI 75 does.

Maybe [ Tim ], just I'll add. So firstly, we think we have -- there is a clear best-in-class opportunity here. And we've done extensive modeling looking across every psoriasis program that's ever been run to understand what regression looks like, variability of these endpoints. And so we believe that not only do we have a best-in-class agent, but that we can demonstrate that experimentally in a head-to-head study. Now a guiding principle for our Phase III program will be speed. So we're going to choose a Phase III program that will take us as rapidly as possible to filing and approval in the U.S. Europe may be a little bit different, given some of the HTA requirements, but we'll also try to our hardest to go as fast as possible in Europe and rest of the world. So speed will be a key element, and then access will be also a key element. And so we feel very confident that we can do both, a fast Phase III study and also find a way to experimentally demonstrate that we have a superior investing PASI molecule. But as Graham is saying, we're still -- I think Graham cites this statistic quite frequently. I think we're 28 or 29 business days after close of the deal. So we're still working through a lot of this. With that said, we have a full team in place. We have every member of the team established. We actually -- many of the skill sets were internally. There were some that we've had to go outside and hire, but we've been very fast in putting this team together. So we're ready to push this program very quickly. It's our top priority in R&D right now.

If I can just clarify on that last comment about the need for speed with Phase III, are you telling us that in the context of what you might choose for a head-to-head comparison product?

Yes. So I mean, again, to the point that Graham has been stressing, we still need to go through a process here with agencies. But if you look at the design of psoriasis studies historically, Phase III studies, they're fairly traditional designs, and we have a prototype that we can follow. That's the -- if you just look at the competitive landscape. And so we're going to be pushing for speed. And in addition, we'll be also creating a strategy to demonstrate differentiation. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]