Takeda Pharmaceutical Co (NYSE:TAK) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.

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Summary

Takeda Pharmaceutical Co delivered a solid start to fiscal year 2026, with first-quarter core revenue and core operating profit declining by 0.5% at constant exchange rates, aligning with expectations.

The company is advancing its Two-Horizon strategic roadmap, focusing on the successful launch of Orzafl, Rusfertide, and Zazositinib, as well as continuing its transformation program to drive future growth.

Takeda received its first approval for Orzafl in China and anticipates U.S. and Japan approvals by Q2, with launches expected in the second half of 2026.

Rusfertide has obtained U.S. FDA priority review, with a launch expected in the second half of 2026, and Zazositinib is set for a U.S. launch in the first half of 2027.

The company's R&D pipeline is robust, with significant progress in oncology treatments and preparations for key product launches, supporting long-term growth.

Management highlighted continued investment in growth initiatives, with a commitment to maintaining strong free cash flow and financial discipline.

Takeda announced a collaboration with the Indonesian government to build plasma operations, enhancing its PDT business and global plasma ecosystem.

The company reaffirmed confidence in its strategic direction and growth trajectory, aiming for accelerated revenue growth and sustained value creation.

Full Transcript

OPERATOR

For those of you who wish to listen to this call in English, please select English in the Zoom language select button. Julie, please go ahead.

Julie Kim, President and CEO

Thank you. Chris, thank you for joining us for today's earnings call focused on the first quarter of fiscal year 2026. We delivered a solid start to the fiscal year and our performance this quarter demonstrates steady progress against our strategic priorities, keeping us firmly on track to achieve our full year guidance. These achievements reflect our continued execution against the Two-Horizon strategic roadmap we shared last quarter, which will position us for accelerated growth in the years ahead to expand impact for patients and set the stage for sustained value creation.

Today I will outline this quarter's progress against our priorities. Financially, we delivered a solid quarter and made steady progress against our fiscal year 26 priorities. In the first quarter, core revenue declined slightly at 0.5% at constant exchange rate, or CER, in line with our expectations as momentum across our core inline brands and existing new launch brands largely offset anticipated headwinds in our mature portfolio. Core operating profit declined 0.5% year over year at CER, reflecting the continued investment behind our upcoming launches and exciting late-stage pipeline, which we are partially offsetting by savings generated through our transformation program. And core EPS was 154 yen, a decrease of 11.8% at CER, mainly due to a favorable tax position in the prior year. Milana will walk you through the financial dynamics in more detail shortly, but the key takeaway is that we are well on track towards our full year guidance. This quarter we had strong execution across all Horizon 1 priorities. We are ensuring the resilience of our existing portfolio with our core inline brands growing by 2.3% at CER.

We also continue to execute against our transformation program. As an example, we have largely completed the implementation of our International Business Unit, which is bringing leadership and teams closer to patients and customers and supports more simplicity, speed, and efficiency. We'll do all of this without sacrificing quality to help us move at pace to bring life-transforming medicines to patients. Takeda's consistent and effective execution of our enterprise transformation is enabling us to fund our launches and advance our pipeline.

It also represents a fundamental change in how we work today and how we will grow as a company in the future. We also made excellent progress across the pipeline this quarter. We are pleased to have received our first approval for OVEP Parexetin in narcolepsy type 1 under the brand name Orzafl in China, and approvals in the U.S. and Japan are key milestones expected in Q2. I will speak more about the important milestones and progress towards launch for Orzafl, Rusfertide, and Zazositinib on the next slide.

In oncology we presented TAK-928 data at ASCO in first- and second-line non-small cell lung cancer, and we initiated a phase 3 study of EL ridercept in first-line anemia-associated MDS. Taken together, our three priorities for FY26 remain firmly on: continue advancing preparations for the successful launch of Orzafl, Rusfertide, and Zazositinib; progress the next wave of our pipeline; and continued execution of our transformation program to unlock new capabilities and efficiencies.

We continue to build the foundation for our future growth by preparing to bring new medicines to patients, with the first Orzafl approval obtained in China. We eagerly look forward to bringing our first-in-class orexin agonist for narcolepsy type 1 to patients in the U.S. and Japan as well, with launches expected in the second half of 2026. Orzafl has delivered transformative efficacy across a broad range of NT1 symptoms. At the SLEEP 2026 meeting we presented additional Orzafl phase 3 data reinforcing the potential of this medicine to establish a new standard of care by improving measures of daily function, cognition, and nighttime sleep in patients with narcolepsy type 1. Rusfertide, our potential first-in-class hepcidin mimetic for polycythemia vera, has demonstrated rapid, stable, and durable hematocrit control while reducing patients' reliance on phlebotomy. Rusfertide has obtained U.S. FDA priority review, and we expect a U.S. launch also in the second half of 2026. Following Protagonist's opt-out from U.S. co-commercialization, we are excited to have sole responsibility for commercializing Rusfertide globally, and we are committed to maximizing its growth potential and impact on patients.

Turning to the third of these transformative medicines, Zazositinib is our potential best-in-class oral treatment for psoriasis, delivering rapid and durable skin clearance in a convenient once-daily pill with no fasting restrictions. We are on track towards launching in the U.S. in the first half of 2027. Our confidence in its profile is stronger than ever. In our recent head-to-head phase 3 psoriasis study versus ducravacitinib, Zazositinib demonstrated statistical superiority for all primary and key secondary endpoints, with more than 35% of patients achieving PASI 100, or complete skin clearance, at week 16.

We also shared new data this month from the pivotal phase 3 psoriasis studies demonstrating that Zazositinib achieved consistent high rates of skin clearance across the body, including hard-to-treat and high-impact sites. Andy will talk more about this in a few minutes. Importantly, we are not just generating compelling data, we are continuing to lay the groundwork for successful launches for Orzafl. We have had medical science liaisons in the field for more than a year.

We've engaged payers and KOLs, and we've set up specialty pharmacy and patient support programs to facilitate an exceptional patient experience. For Rusfertide, we are building HCP awareness of the importance of sustained hematocrit control and leveraging our established hematology commercial infrastructure to ensure we're ready for a successful launch. For Zazositinib, payer discussions and broader prelaunch preparations are already underway, supporting our ambition not only to gain market share but also to expand the oral treatment segment.

Our efforts are planful. We believe they will enable us to ensure these transformative medicines will reach patients as quickly as possible, delivering on our commitments in Horizon 1 and positioning Takeda for accelerated long-term growth. These milestones reinforce the depth of our late-stage pipeline and reflect the sustained, disciplined commitment we have to faster AI-enabled discovery and development, strong market access, and best-in-class scientific, medical, manufacturing technology, and commercial capabilities.

Today we are in Horizon 1 and fundamentally transforming Takeda from within. This includes optimizing our operations, strengthening our competitiveness, and successfully launching new medicines that will become our future growth drivers. As I just shared, this phase is progressing well through our launch preparation, pipeline progress, core inline brand resilience, and execution of our transformation. To provide an additional example, we recently announced a landmark collaboration with the Indonesian government to build plasma operations in the country, starting with establishing plasma donation centers and assessing the feasibility of potential future manufacturing capabilities. Partnerships like this support the growth of our PDT business and the competitive resilience of our core inline brands while reinforcing our commitment to a sustainable global plasma ecosystem. Throughout this period we are committed to a clear set of performance measures: returning to top-line growth, protecting our core operating profit margins while making substantial growth investments, and improving our return on equity to above 5%.

The entire Takeda team is working diligently to execute on our priorities and establish a strong foundation in Horizon 1. Every milestone we accomplish reinforces our path of progress towards Horizon 2 growth acceleration. Our employees' relentless dedication and discipline will continue to set the stage for sustained value creation for patients and shareholders. With that, I will hand the call over to Milano to walk through our first quarter financial results in more detail.

Milano Furuta, Chief Financial Officer

Thank you, Julie, and hello everyone. Let me walk through our financial highlights for Q1 of fiscal year 2026. Overall, our Q1 results are on track towards full-year guidance. Revenue was 1.22 trillion yen, an increase of 10.2% on an actual FX basis or a decline of 0.5% at constant exchange rates, or CR. Core operating profit was 358.9 billion yen, up 11.5% at actual FX or minus 0.5% at CR, while reported operating profit was 201.4 billion yen. Core EPS was 154 yen, with an 11.8% decline at CR as expected, mainly reflecting tax favorability in the prior year.

Reported EPS was 72 yen. Operating cash flow was lower than the prior year, reflecting changes in working capital related to our trade receivables factoring program. Adjusted free cash flow also reflects a payment of 200 million US dollars to Protagonist following their decision in April to opt out of a co-promotion agreement for rusfertide. As Julie highlighted, this means that Takeda now holds exclusive development and commercialization rights for rusfertide globally.

Overall, we are on track to deliver 650 to 750 billion yen free cash flow for the full year. Slide 10 shows a revenue bridge versus the prior year at CR. Core revenue declined 0.5% as growth from core inline brands and new launches largely offset the decline from LOE and mature products, which includes the continued generic erosion of VYVANSE in the US. Core inline brands represented 58% of total revenue and grew 2.3% at CR, which is on track with our expectations for Q1.

Our largest product, Entyvio, remains resilient with 4% growth at CR, while immunoglobulin and albumin were both impacted by phasing in the US, which was within expectation. Our new launches category is still small today, only 4% of total revenue, but it is growing strongly at 22.6% at CR, supported by Fruzaqla, Livtencity, Adzynma, and Qdenga. We are excited at the prospect of introducing new products to this category with the potential launches of Orzaful and Rooseveltai later this year.

Finally, FX was a big positive to our top line, adding 118.2 billion yen to deliver 10.2% growth at actual exchange rates. Slide 11 shows a bridge of core operating profit consistent with our priorities in Horizon 1. We have positioned fiscal year 2026 as a year of growth investment funded by savings from our Transformation Program. The Transformation Program is firmly on track, as Julie commented earlier. However, many of the initiatives were implemented at the end of the quarter, meaning the savings amount captured in Q1 results is still relatively limited.

All the high-priority growth investments are on track, including launch readiness for Orzaful, rusfertide, and Associate NIF, as well as progress of late-stage development programs such as TAK-928 and TAK-921. We continue to demonstrate cost discipline alongside targeted investments. Finally, you can see in the chart that gross profit was positive in Q1, primarily driven by favorable FX variance in cost of goods, as well as a one-time divestiture-related milestone.

Next, reported operating profit on slide 12. As you can see in this chart, the two main factors impacting year-on-year performance were lower amortization of intangible assets, mainly due to the completion of VYVANSE amortization in January 2026, and higher restructuring expenses related to the Transformation Program. FX also provided a tailwind, resulting in 9.1% growth versus the prior year at actual exchange rates. Slide 13 shows our full-year fiscal 2026 outlook, which is unchanged from May, and our Q1 performance was fully on track towards our targets for this year.

I will close my section of the presentation by re-emphasizing our commitment to strict financial discipline through our two growth horizons. In particular, during this Horizon 1, our focus is on returning to revenue growth, protecting operating profit, improving reported profits and ROE, and maintaining strong adjusted free cash flow. I look forward to sharing our ongoing progress towards these goals. Thank you, and I now pass to Andy for updates on the pipeline.

Andy Plump, President, Research & Development

Thank you, Milano, and hello to everyone on today's call. I want to frame this quarter simply. Takeda R&D is ready to convert pipeline progress into commercial performance that supports our two-horizon growth strategy. Over the coming months, we are poised to launch three transformative medicines—Orzaphyl, rusfertide, and zazacitinib—each with the potential to redefine the standard of care in its field and, together, set Takeda on a new growth trajectory.

Let me begin with Orzaphyl, which I believe is one of the most exciting stories in neuroscience today. Narcolepsy type 1 is a lifelong disorder caused by the loss of orexin signaling, leading to disabling daytime and nighttime symptoms. At the 2025 World Sleep Congress, we presented groundbreaking results from two Phase 3 studies that met all 14 primary and secondary endpoints, demonstrating statistically significant and clinically meaningful improvements.

Orzaphyl delivered transformative efficacy across the broad disease spectrum, including daytime symptoms like excessive daytime sleepiness and cataplexy, as well as nighttime symptoms, cognitive symptoms, functional improvements, and quality of life. Orzaphyl doesn't just manage symptoms; it addresses the underlying orexin deficiency in NT1, offering patients a single, well-tolerated oral therapy that could restore how a majority of NT1 patients feel and function.

We are on track to bring the first and only orexin agonist to patients living with NT1. As Julie mentioned, we have received our first approval in China, and we eagerly await decisions in the U.S. and Japan this quarter. At Sleep 2026, we presented additional Phase 3 data that I would describe as remarkable, with improvements spanning daily function, cognition, and nighttime sleep. Let me share a few of the highlights. Using the Functional Impacts of Narcolepsy Instrument, or FINI for short, we saw significant improvement across all functional domains with p-values below 0.0001, including benefits to cognitive functioning, social activities, everyday activities, and daily responsibilities. These important benefits led to significant gains in work productivity, activity impairment, and quality of life. On cognition, we saw improvement versus placebo in attention, memory, and executive function, each with a very significant p-value. On nighttime sleep, I want to dwell for a moment on the striking REM latency finding. REM latency is the time it takes to enter the first REM sleep stage after falling asleep.

REM sleep disturbances can manifest as sleep paralysis, sleep-related hallucinations, and sleep disruptions. At baseline, our NT1 patients had a mean REM latency of about 50 minutes against a healthy control value of roughly 130 minutes. Orzaphyl shifted mean REM latency into the normative range across all treatment groups in both the First Light (OR-3001) study and the Radiant Light (OR-3002) study. This objective shift in sleep is unprecedented.

To keep it simple, we are showing data from the Radiant Light study; both trials produced similar results. As you can see, the objective REM shift is corroborated by the subjective assessments. We measured the subjective effects on REM-linked sleep using the NSS-CT, or Narcolepsy Severity Scale for Clinical Trials, a validated instrument used in narcolepsy. Orzaphyl significantly reduced hallucinations and sleep paralysis in all treatment groups, and it did so with no clinically meaningful disruption to sleep architecture.

In practical terms, we are significantly improving—often normalizing—a patient's day and night. Now let me turn to zazacitinib, our next-generation, highly selective and potent oral TYK2 inhibitor. Here too, the data speak for themselves. In our Phase 3 head-to-head psoriasis study, zazacitinib significantly outperformed deucravacitinib at week 16; more than 35% of zazacitinib-treated patients achieved complete skin clearance as measured by PASI 100.

We have two key takeaway messages from these topline results. One, this was a well-run trial, with deucravacitinib having data consistent with past Phase 3 trials. Two, this is the best 16-week efficacy in psoriasis that we have seen from a pill. Zazacitinib is poised to be a leading oral option with a fantastic efficacy and safety profile. Full details will be shared at a medical meeting this fall. What gives us additional confidence is the performance in the hard-to-treat, high-impact areas like psoriasis of the scalp, palms, and soles, as demonstrated here by the high rates of skin clearance in the Phase 3 LATITUDE programs, as well as statistically significant benefits to nails. These are the places where psoriasis can have the greatest day-to-day impact, for patients who are among the hardest to treat. The new psoriasis data continues to add to our library of outstanding Phase 3 results. I'd like to take a moment to remind you that zazacitinib is far more than just a psoriasis story. As you can see here at the top, zazacitinib has studies underway across a broad range of immune-mediated diseases like psoriatic arthritis, Crohn's disease, ulcerative colitis, vitiligo, and hidradenitis suppurativa.

Zazacitinib is a molecule we believe could redefine what is possible with a convenient once-daily oral therapy. We anticipate a Phase 2 data readout for Crohn's disease and ulcerative colitis at the end of our fiscal year 2026. Our orexin franchise continues to advance. Orzaphyl has initiated the important 3003 Phase 3 study, which will support filing in Europe. This potentially label-enabling trial will, for the first time, generate clinical data on direct switches from polypharmacy to Orzaphyl.

In addition, for the small number of patients who may benefit from dose escalation, the trial will include a higher-dose option. Beyond Orzaphyl, we are advancing TAK-360 in narcolepsy type 2 and idiopathic hypersomnia, and anticipate Phase 2 data later this calendar year. The third of our imminent launches is rusfertide, a first-in-class hepcidin mimetic for polycythemia vera. Rusfertide delivers rapid, stable, and durable hematocrit control, addressing a major unmet medical need in PV.

It is filed in the U.S., with an EU filing targeted later this fiscal year. We have an August PDUFA date, and anticipate launch immediately thereafter. Now, I want to be clear that our story does not end with these three assets. They are the starting acts of the most robust late-stage pipeline in Takeda's history, and as we continue through Horizon 1, we will advance the next wave of pipeline progress with key readouts and milestones. As Julie shared earlier, in Oncology, Elritercept has started two Phase 3 trials in first- and second-line myelodysplastic syndrome and will soon start a pivotal trial in myelofibrosis.

We presented important updates at ASCO in June for TAK-928, our PD-1/IL-2 alpha-biased bispecific fusion protein, first in patients with second-line-plus IO-resistant non-squamous non-small cell lung cancer, an area of great unmet need. We showed a 42% overall survival rate at two years. We are planning for a pivotal Phase 3 in this refractory population later this fiscal year. In first-line non-small cell lung cancer patients with less than 50% PD-L1 expression, we were excited to see outstanding early data for TAK-928 in combination with chemotherapy, with favorable safety data.

We are looking forward to additional data cuts in the coming months as the trial matures. TAK-921, also known as ARCO tavatecan, is an oncology program that has received less attention but remains highly promising. Strong progression-free survival data was announced from our partners at Innovent in June from a regional Phase 3 trial in third-line gastric cancer. We plan on filing in Japan in fiscal year 2027 using mature overall survival data from this trial.

In PDT, TAK-881, our 20% next-generation facilitated subQ IG, is advancing towards a U.S. filing in primary immunodeficiency, and filings in multiple indications in Europe and Japan. Let me close where I began. What you're seeing from Takeda R&D is the result of our sustained focus on pursuing science. We have the depth to lead and commitment to disciplined choices that allow us to advance programs with the most meaningful patient potential. Orzaphyl, rusfertide, and zazacitinib are the leading edge of that strategy, and behind them is a pipeline with the depth to sustain this momentum well into the future.

If we take a step back, we anticipate U.S. launch of Orzaphyl in the second half of 2026, rusfertide launch in the second half of 2026, and zazacitinib launch in the first half of 2027—three potential new standards of care launching in close succession, two of which carry Breakthrough and Fast Track designations. This is the launch cadence that underpins our confidence in Takeda's growth trajectory. I have never been more confident in the science, in the team behind it, and in our ability to improve patients' lives and build a healthier world for generations.

I look forward to sharing our continued progress with you. Thank you. And with that, I'll turn it back to Julie to wrap up the presentation.

Julie Kim, President and CEO

Thank you, Andy. As you have heard, the momentum across our R&D organization is translating directly into tangible milestones with the goal of bridging us from transformation to growth acceleration. We are also dedicated to operational discipline, and our enterprise transformation is already starting to unlock capital to reinvest in our pipeline and launches. In summary, we are delivering on our priorities in Horizon 1 towards a clear set of operational and financial goals.

These milestones will enable us to secure a strong foundation that will advance us to Horizon 2, an era that will be defined by accelerated revenue growth, structural margin expansion, and sustained value creation. We know our shareholders are eager to discuss more details of this path forward, and I am pleased to announce that we will host a Capital Markets Day in Tokyo on December 11, 2026. At that event, the executive team and I will provide a deep dive into our pipeline progress and mid- to long-term financial ambitions in line with our two horizons strategic roadmap that will guide our growth through the end of the decade and beyond.

We have the right strategy, a highly competitive portfolio, and a united, deeply committed global team. I am proud of the progress we made this quarter, and I am incredibly energized by the trajectory we are on. With that, I'll now turn the call over to Chris for Q&A.

Yamaguchi, Analyst

Hi, can you hear me? It's Yamaguchi.

OPERATOR

Yes, we can hear you.

Yamaguchi, Analyst

Oh, thank you very much for taking my questions. Yamaguchi speaking. I have two questions. The first question is the overall earnings, and Miranda mentioned gross margin on the Q1 seemed to be relatively high compared to full-year guidance, and you talk about some product mix, but also you talk about some divestiture-related things. So how much is contributing this divestiture thing, and is it just one-off or not? So can you give me a comment on those gross margin prospects, Q1 and full year.

The second question is that you may not have the answer yet, but Orzaphyl has been—it's now approved in China and also will be approved in the U.S. and Japan. Can you give me the overall strategy, how you're going to push on this drug compared to the current therapy? Are you going to add on, or are you going to replace? Or are you going to take the new patient, or are you going to take the share from the existing patients? How about the pricing strategies?

So if you have any kind of general strategy on a global basis on those, please let me know. Thank you. Those are two questions.

Chris, Investor Relations

Thank you, Yamaguchi-san. So the first question on breakdown of gross margin performance, so Milano can take that, and then the second question on Orzafel as we prepare for global launch, any additional commentary on positioning, where we'll get the patients, pricing, etc. Julie can comment on that one. Milano.

Julie Kim, President and CEO

Thank you, Yamaguchi-san, for the question about Orzafel positioning. So let me share a few thoughts with everyone on this. First, just a quick reminder why we're so excited about Orzafel. It is the first-in-class and potentially best-in-class orexin agonist designed to treat the underlying orexin deficiency that causes NT1. And as you saw from the information that we shared previously and Andy shared on the call today, the efficacy across a broad disease spectrum is really impressive.

And so we do anticipate that Orzafel will redefine the standard of care in NT1. So in terms of how we expect Orzafel to be used, we studied it as a monotherapy, so that is our anticipation, that Orzafel is an effective monotherapy treatment. In terms of where the patients will come from, I would say there's two sources. First and foremost, we will be addressing the patient need for individuals who are already diagnosed with NT1 and already on therapy.

That will be the initial source of growth for Orzafel. The second source of growth will come from improved diagnosis. This will take a bit longer time in order to drive better diagnosis, but that would be the second source of growth. And then I think your third question was on pricing for Orzafel. So obviously we don't share pricing at this point ahead of launch. But in general our approach to pricing is to ensure appropriate value recognition for the transformative nature of the medicine, but at the same time support fast access as this is a significant breakthrough in treatment option for individuals with NT1.

OPERATOR

Thank you. Thank you.

Chris, Investor Relations

Thank you, Mura Okasan, for the questions. So the first on TAK-360 data disclosure timing, would that be ahead of the capital markets day in December? And then what is the positioning or the background behind studying TAK-360 in narcolepsy type 1? And then the second question on timing of zazacitinib UC and CD data and also how that data would be presented. Will you announce the results of both studies simultaneously? So both of these questions I'd like to call on Andy to comment on those, please.

Andy Plump, President, Research & Development

Great. Thanks, Chris, and thank you very much, Miroka-san. This is Andy Plump. Firstly, with respect to TAK-360, I'll just remind everybody that TAK-360 is in the midst of three ongoing phase 2 studies, one in idiopathic hypersomnia, one in type 2 narcolepsy, and then a recently started one in type 1 narcolepsy. In terms of timing for the former two, IH and NT2, the study design is such that it is built around an adaptive design that allows us to rapidly pivot and explore both dose and dose regimen.

We're testing both once-a-day and twice-a-day doses. So in such a design we don't have a clear end date. We will see data from that trial this year. The exact timing, whether it's available for the capital markets day in December, remains to be determined. In terms of the rationale for starting TAK-360 in type 1 narcolepsy, first I'll say that we are extremely confident—and you've seen the data for Orzafel—we believe that Orzafel is not just a first-in-class but a best-in-class agent for type 1 narcolepsy.

With that said, we're at the very front end of understanding what orexin agonists can do across a broad range of diseases. And so our interest is to continue to learn more and to continue to explore. With respect to zazacitinib and IBD, both the UC and Crohn's disease trials are going well. We expect to have data by the end of this fiscal year. In terms of how and where we present those data, that's still something that we're sorting through. Thank you.

Chris, Investor Relations

Thank you for the question. So the first on Entyvio growing at 3.8% at constant exchange rate in the first quarter, so any comments on sort of prescription trends, how the performance is going for Entyvio? And then the second question on Rosfertide, in particular how you will be positioning versus phlebotomy in terms of pricing strategy. So I think both of those questions, Julie, I'd like to ask you to comment on those, please.

Julie Kim, President and CEO

Thanks for the questions, Matsubaru-san. Let me tackle Entyvio first. So when we look at Entyvio, as you know it's been on the market for over a decade now and we're pleased that we continue to be able to grow Entyvio. It's still the number one prescribed brand in IBD overall, particularly with first-line leadership in UC. And when you look at the performance in the US, I would say a couple of things. Although sales were down in Q1 year over year at constant exchange rate, we do see overall demand growth.

The decline is due to pricing mix and lower days on hand. When we look at the growth of Pen, we continue to see very strong growth of Entyvio Pen in the US, and so we're pleased with that continued progression. For our markets outside of the US, here we continue to see strong growth with 6.7% growth in Europe, 10% in Japan, and the rest of our intercontinental markets about 36% growth. So again, very strong performance for Entyvio driven by Entyvio subcutaneous, or the Pen, across all of our markets.

So for the full year we do expect to be able to hit our guidance. Your second question in terms of Rosfertide pricing. So again we won't share details of pricing at this point, and I'll just reiterate that our approach to pricing is to make sure that we can receive appropriate value recognition for Rosfertide, but also allowing rapid access for patients. So we will balance that as we look to finalize pricing.

Chris, Investor Relations

Thank you. Thank you, Matsubara-san. For the next question I'd like to call on Mike Nadelkovich from TD Cowen. Please go ahead and ask your question.

Mike Nadelkovich, Analyst at TD Cowen

Hi, thank you so much for the questions. I have two. My first is actually on mezagitamab. Back in December 2024, you laid out a peak sales ambition in ITP and IgAN of US$1 to US$3 billion. Have there been any developments in either mezagitamab's development or in the competitive landscape that make you more confident in one or the other end of that range? And are there any indications being explored that could be added to this target in the near future?

So that's my first question. And then my second question is on the risk of Entyvio biosimilars in the U.S. What's the roadmap from here to your estimated 2032 timeline? What is the next step that we should be monitoring? And is there any Entyvio Pen IP that could extend exclusivity further than 2032?

Chris, Investor Relations

Thank you. Great. Thank you, Mike. So the first question on how we're progressing with mezagitamab and thoughts on recent developments in these markets, I think Andy can take that question. And then the second on biosimilars for Entyvio and sort of route from here to 2032 in terms of biosimilar entry and whether the Pen gives us any extended IP, Julie can answer that question, please.

Andy Plump, President, Research & Development

Mike, thank you. Thank you very much. This is Andy. So as you know, we have two ongoing phase 3 studies for mezagitamab. One is in third-line ITP and the other is in IgAN. We just recently started a phase 2 program in antibody-mediated rejection. So we have three indications that are going rapidly with mezagitamab. We do continue to look at additional indications, so stay tuned. I think to your question, the biggest development for us recently has been the recognition from our long-term extension data from our phase 1b/2 proof-of-concept study that with short-term dosing we're seeing a very durable effect.

And we've presented data, and I think I've shared it in previous earning calls, that with up to six months of therapy we see sustained activity on clinical endpoints up to two years. So this is really exciting. The confidence we have that this is a real effect and relates back to the underlying pharmacology of the drug and the biology of this disease, we think is real. So we actually made an adaptation to the phase 3 design. Initially the administration schedule was going to be six months on, six months off.

We've now decided to administer mezagitamab for six months and then track patients thereafter to the primary endpoint at one year and at two years. So we believe we have a product that not only is going to be differentiated in terms of its safety and efficacy, but also in terms of its administration schedule.

Julie Kim, President and CEO

Thanks, Mike, for your questions, and let me just add a quick comment because I think you did also inquire about peak sales estimates for mezagitamab. So we're not changing any peak sales at this point, but when we get to the capital markets day in December, we will provide peak sales based on current assumptions and current landscape. So hold until then for that information. In terms of your second question regarding Entyvio in relation to biosimilar entry, our time frames here have not changed.

So when you look at the U.S., because I think your question was specific to the U.S., we expect it to still be roughly three to five years in litigation. We will defend our IP positions. We feel very good about our IP position, and so this is something that we will continue to provide updates on, but no change in overall timeline.

Mike Nadelkovich, Analyst at TD Cowen

Thank you so much.

Chris, Investor Relations

Thank you, Mike. And so for the next question I'd like to call on Miki Sogi from Bernstein. Miki, please go ahead and ask your question.

Miki Sogi, Analyst at Bernstein

Thank you. I have two questions. The first one is to Andy about IBI363. So on the page 23 I see that you have achieved the proof of concept of this product for second-line non-squamous non-small cell lung cancer and first-line non-small cell lung cancer. So are these the data that we have not seen? And then we are also we should be expecting to see the data at ESMO this year. That's the first question. Second question is about the launches of Orzafel and Rusfertide.

To be honest with you, I'm a little bit surprised that you didn't really mention any commercial launch preparation during the presentation, despite the fact that launch or approval is imminent. And I'd like to see what are the key operational KPI that you are currently thinking of for these product launches, and hopefully we will get the update on that later on.

Chris, Investor Relations

Thank you, Miki. So the first question on TAK-928 PoC achievements, as we've marked on this slide, Andy can provide some color on that. And then the second question, Orzafel, Rusfertide launch preparation, what the operational KPIs will be, etc., Julie can comment on that one, please.

Andy Plump, President, Research & Development

Great, thank you, Miki. So just to remind everybody, IBI363, or what we now call TAK-928, is our PD-1/IL-2 alpha-biased bispecific protein that we've partnered with Innovent on. We're pursuing multiple indications in parallel. We've already started a phase 3 global program in IO-refractory second-line squamous non-small cell lung cancer. And to your question, Miki, we now have very encouraging phase 1/2 data out of our partner's work at Innovent in both first-line non-small cell lung cancer and also second-line adeno or non-squamous non-small cell lung cancer.

Those data were actually presented by Innovent at ASCO, and I can just provide some high-level summary information. Firstly, in the refractory setting for patients with non-squamous or adeno non-small cell, we've seen really striking overall survival data—so 42% overall survival at two years. Of course, it's difficult to compare study to study, but this is a population that at two years has an overall survival rate of approximately 20%. We're very excited to get that phase 3 study going.

And then, of course, the largest population is going to be in frontline. We had data that was presented—we have maturing data that was presented at ASCO by our partners at Innovent—that suggests response rates of upwards of 80%. So we'll continue to track maturing data, but we're preparing to start that phase 3 study later in this fiscal year.

Miki Sogi, Analyst at Bernstein

Oh, and Andy, I have a follow-up question on the first line. I believe that, you know, the data that was presented at ASCO was, you know, those dose-escalation or dose-selection phase, and you are running, or Innovent is running, the dose-expansion phase, which is actually a head-to-head against Keytruda plus chemotherapy, I believe. And I just wanted to see if those expansion phase with comparator data will be presented at ESMO. And so your POC you are referring to doesn't really include that data.

Andy Plump, President, Research & Development

Yeah. So thank you, thank you very much. So of course the phase three study will be done depending on the mutation burden. It will be done either against a PD-1, Pembro, with chemo, or versus a PD-1 alone. In terms of the maturing data, Miki, we don't have specific plans to share today as to when those data will be available, but we assure you that as those data mature, we will present them in rapid fashion. So thank you for the question.

Julie Kim, President and CEO

Sogi San, maybe I wasn't excited enough in my voice. I did talk about the launch preparation during the presentation, but let me share in more detail so that you get a sense of what we've been doing. So first I will tackle Orzaful. When you look at the—and I'm assuming you're asking specifically about the U.S., although both China and Japan are also fully prepared. In China, we now have the approval, as you heard. One thing I do want to say about China is that the submission for NRDL approval, the window is only once per year, and so the approval came after that window.

So we won't be able to submit for NRDL until next year, meaning NRDL listing wouldn't be available until January of 28. So between now and then we will focus on private market, and then the full launch will be after we receive—hopefully we receive—NRDL listing. So in the U.S., as I mentioned during the presentation, we've had our MSLs in the field now for over a year, focused on awareness and education around orexin and the mechanism of action. We've had our sales in the field mapping accounts, getting introduced to the sleep centers in particular, we've been running disease state education campaigns, we've been having payer meetings. Our specialty pharmacy network and patient support programs are ready to go. So at this point we are waiting for the FDA approval and then the subsequent DEA scheduling, and we'll be ready to go. For respiratoryde, some very similar activities, again in the field, doing education and awareness.

As I mentioned in previous calls, there is a sense of inertia in terms of the current level of treatment for polycythemia vera patients. They're viewed as a, quote, unquote, good cancer patients. And so it's a lot of education we need to do to help shine a light on the burden that PV patients have. We're also doing end-to-end patient experience programs that are again ready to go, and of course the payer engagements. So all of that is in play. In terms of the things that we, you know, metrics that we'll be looking at, it'll be things like patient numbers, payer coverage, and source of patients.

So hopefully that addresses your question.

Miki Sogi, Analyst at Bernstein

Sure. Julie, I have one additional question. What is the target of payer coverage after 12 months of launch? Commercial coverage.

Julie Kim, President and CEO

Yeah. So we are trying to secure commercial coverage as quickly as possible. So at this point I'm not going to share a target with you, but we want to make sure we have broad coverage.

Miki Sogi, Analyst at Bernstein

Thank you.

Chris, Investor Relations

Thank you, Mickey. I think we'll take one final question. So we'll end with Stephen Barker from Jefferies. Steve, please go ahead and ask your questions.

Steve Barker, Analyst at Jefferies

Thanks. Steve Barker from Jefferies. So congratulations on the China approval of Orzaful. Could you clarify whether the approved label includes both the 1 mg and 2 mg tablet strengths? That is, do the physicians in China have the flexibility to prescribe either dose, or is the label focused on the 2 milligram BID regimen that was tested in Radiant Light? And follow-up question, is the same strength profile reflected in the U.S. and Japan applications, please?

Thank you.

Julie Kim, President and CEO

Thank you, Steve. So Andy, would you like to answer those questions, please?

Andy Plump, President, Research & Development

Sure. So Steve, the label hasn't been released yet in China, and of course we're still in the process of discussing the label in the U.S. and Japan, so we can't comment specifically what's on the label, but we can say that the expectation in China and the U.S. at least was—we've not gotten to this point of discussions with Japan—is if physicians will have access to multiple doses for patients.

Steve Barker, Analyst at Jefferies

Okay, great. And if I can just follow up with a question about TAC360, there's two aspects of what you presented today that caught my attention. So you as testing at an NT1, which suggests that it has the potential to expand the market opportunity beyond Orzaful. I was wondering if you could explain that, and then also the fact that you're evaluating both once-daily and twice-daily dosing. If you could explain that development choice as well, please.

Andy Plump, President, Research & Development

So just quickly, in the interest of time, Steve, so again, we are fully confident in Orzaphil and in the profile that we've seen for Zefil, and we think it's going to be a best-in-class agent for type one narcolepsy. We also recognize that we're really at the front end of understanding what orexin biology can do across a range of diseases, understanding dose, dose exposure, and clinical response. And so with TAC360, given that it's relatively early in development, our goal is to be as thoughtful as possible within a disease, testing as broad a range of doses and dose regimens, as well as across diseases, to understand what the potential of that molecule is. And once we have all those data, then we'll make decisions as to what doses we bring forward and what indications.

Steve Barker, Analyst at Jefferies

Fantastic. Thank you very much.

Chris, Investor Relations

Thank you, Steve, for your questions. That brings our Q and A session to a close, and I'd like to now hand it over to Julie for some closing remarks.

Julie Kim, President and CEO

So thank you, everyone, for joining us today and for your very thoughtful questions. I hope you are equally excited about our expected launches as we are, and I hope that many of you will join us later this year for our Capital Markets Day on December 11th here in Tokyo. I look forward to sharing our longer-term ambition with you and spending a bit more time on our strategic roadmap that will guide our growth through the end of the decade and beyond.

So thank you again for your time, and have a wonderful rest of your day or evening.

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