TKPHF - Takeda Pharmaceutical Company Limited (TAK) CEO Christophe Weber on Q1 2022 Results - Earnings Call Transcript
Takeda Pharmaceutical Company Limited (TAK)
Q1 2022 Results Conference Call
July 28, 2022 06:00 AM ET
Company Participants
Ayako Iwamuro - IR
Christophe Weber - President and CEO
Andy Plump - President, R&D
Costa Saroukos - CFO
Masato Iwasaki - Japan General Affairs
Conference Call Participants
Hidemaru Yamaguchi - Citi
Motoya Koutani - Nomura Securities
Seiji Wakao - J.P. Morgan Securities
Kazuaki Hashiguchi - Daiwa Securities
Fumiyoshi Sakai - Credit Suisse Securities
Akinori Ueda - Goldman Sachs
Presentation
Ayako Iwamuro
Good evening everybody or good morning everybody. Thank very much for joining Takeda’s Earnings Conference Call Webinar for First Quarter FY 2022.
I will serve as NCE today. My name is Ayako Iwamuro in charge of global IR. First, I will explain language setup. At the bottom of the Zoom screen you’ll find language selection. If you want to listen in Japanese, please select the Japanese audio, if you want English audio, then select English, or if you want original audio, please turn off this language function.
Before starting, 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 our most recent Form 20-F and in other SEC filings of Takeda. Please also refer to the important notice on page 2 of the presentation.
Let’s move to the presentation today. We with us Christophe Weber, President and CEO; R&D President, Andy Plump; and Chief Financial Officer, Costa Saroukos. They will be presenting. After the presentation, we will have a Q&A section. Let’s start.
Christophe Weber
Thank you, Ayako, and thank you, everyone for joining us today. Our purpose is to create better health for people, brighter future for the world by discovering and delivering life-transforming treatments, with a commitment to patients across the world, to our people and to the planet. Needless to say that this purpose is more relevant than ever. It’s not only a moral imperative to create shareholder and societal value, but it’s also a way to make the company stronger.
Our performance in the first quarter of this fiscal year reinforced our ability to drive long-term business growth. In the first quarter, core revenue was ¥972.5 billion, with growth at a constant exchange rate of 8.3%, driven by our growth from launch products.
Core operating profit for the quarter was ¥319.1 billion growing at an impressive 17% on a constant exchange rate basis, and core earnings per share grew 15.8% to ¥145. This put us well on track towards our full year guidance for fiscal year 2022 of low-single-digit core revenue growth and high-single-digit core operating profit and core EPS growth at constant exchange rate.
On the reported basis, our strong business performance coupled with favorable foreign exchange, enabled us to deliver a reported revenue growth of 2.4%. And this is despite the large gain of ¥133 billion we booked as revenue in the first quarter of the last year related to the sale of the diabetes portfolio in Japan. On reported profit basis, this one-time transaction had an impact on the first quarter growth rate, but our full-year outlook still anticipates double-digit reported operating profit and EPS growth.
We continue to see progress in our commercial execution. Our diverse portfolio of growth and launch products grew at an impressive 26% at constant exchange rate, driven by ENTYVIO, TAKHZYRO and our immunoglobulin franchise. At the same time, we are very much focused on our launch excellence, as I will detail in a few minutes.
Andy will detail our pipeline progress shortly. So, I would like to now give you an update on our most recent launches in the U.S. Let’s start with LIVTENCITY, which is redefining the way cytomegalovirus or CMV infection is treated. Patients now have access to a therapy that can enable sustained and effective treatment against post-transplant CMV infection, which could save an organ or life that might otherwise be lost.
As CMV is one of the most common post-transplant infection, recent data support the meaningful impact we are seeing. At the recent medical meetings, we presented data on a new exploratory analysis showing that patients treated with LIVTENCITY had reduction in hospitalization and length of hospital stay compared to those treated with conventional antiviral therapies.
We are also seeing promising momentum since the launch in December ‘21. 56% of the 314 U.S. transplant centers have initiated therapy with at least one patient, and demand is continuing to grow. Our global expansion plan is underway with an EU approval decision expected in the second half of fiscal year 2022.
We also anticipate Phase 3 data for LIVTENCITY, which could extend us in first line. We expect the readout at some point later this fiscal year. We are very proud of the impact of this transformative treatment. Patients who would otherwise be vulnerable to CMV, now have hope and the better quality of life.
I’d like to talk about another launch product EXKIVITY. EXKIVITY is an important new treatment for adult patients with locally advanced or metastatic non-small cell lung cancer. It is a first and only approved oral therapy designed to target EGFR Exon20 insertion mutation for patients whose disease has progressed on or after platinum-based chemotherapy. The very unique and distinct value of this important treatment combined with our launch capability is driving its success.
We see it in the continued progress following the launch in the U.S. We are continuing to see better than expected new patient starts and have now reached 50% exon20 market share in U.S. Following approval in the U.S. and the UK, we continue to receive approval from health authorities around the world, most recently in Switzerland, Australia and South Korea. However, in the EU, we decided to withdraw the EU marketing authorization application filing in second-line and non-small cell lung cancer following discussion with CHMP, where the committee indicated that additional clinical data will be needed to confirm benefit for mobocertinib in the second-line.
Pending outcome from the Phase 3 trial in first-line EGFR Exon20 insertion, non-small cell lung cancer, we plan to pursue approval in the EU. This first-line trial is event driven and is targeted for submission in fiscal year 2024. We remain confident that EXKIVITY offers an effective treatment option for patients suffering from this difficult to treat cancer, and are hopeful that we will continue to make important progress on bringing this treatment to patient in needs.
In closing, this quarter is yet another example of our ability to deliver on our mission to transform the life of patient while driving long-term financial growth. This result reinforces that our strategy is working, specifically the launch of our new innovative products, our deliberate investment in data and digital, and also a commitment to sustainability. We have an incredibly exciting time ahead, patient by patient, we see the impact of our mission to transform life.
I now would like to hand over to Andy to introduce our pipeline updates in more detail. Thank you.
Andy Plump
Thank you very much, Christophe, and hello to everyone on the call today.
As Christophe mentioned, the impact we are seeing on the lives of patients is the key factor to our success. We see this impact so clearly, as we make progress in our pipeline. The opportunity to bring transformative medicines to patients is an inspiring and motivating force for all of our scientists. I think you’ll see this today as I walk through a few highlights from the first quarter.
Next slide, please?
There’s a lot of enthusiasm here about our dengue vaccine. We recently presented the final data for TAK-003 and are very pleased with the long-term efficacy against hospitalizations, as well as protection against dengue disease, which was maintained throughout the 4.5 years of our pivotal trial. We will share these results with you shortly.
We reported positive Phase 3 data for HYQVIA in CIDP, a chronic autoimmune and inflammatory disease that affects the peripheral nervous system. Most of the patients in the advanced pivotal trial on active treatment received HYQVIA subcutaneously every four weeks. This convenient dosing and ability to self administer at home has the potential to reduce the burden of chronic immunoglobulin treatment.
Patients with alpha-1 antitrypsin associated liver disease were retreated with fazirsiran, our first-in-class RNAi therapy, and an open label Phase 2 trial. The strong results are published in the New England Journal of Medicine and highlights include the regression of fibrosis in 7 out of 12 patients and a median 83% reduction in accumulated Z-AAT protein in the liver. This is the key pathologic aggregate that causes inflammation and can lead to fibrosis and eventual liver transplant. These early results demonstrate the potential for fazirsiran to one day help these patients avoid liver transplant.
Completing our clinical updates TAK-280, a conditional B7-H3 targeted bispecific T-cell engager designed to treat solid tumors, entered the clinic this quarter. This is the second program that we have entered into the clinic from Maverick Therapeutics, our build to buy acquisition completed last year.
And as Christophe highlighted earlier, we have in licensed an exciting hypersialylated immunoglobulin candidate for Momenta Pharmaceuticals. This therapy has the potential to increase potency, allowing for significantly lower doses.
If you go to the next slide 10 please. Here are 10 late-stage development programs, Nuvaxovid was approved early this fiscal year and is now available in Japan, adding to the armament against COVID-19. Modakafusp alfa is our first in class immunocytokine that delivers an attenuated interferon to tumor and immune cells in a highly targeted manner. Updated results presented at the European Hematology Association for single agent modakafusp alfa show an overall response rate of 43% with multiple complete responses in heavily pretreated patients, importantly, including those refractory to anti-CD38 therapies. This quarter, we started the first of a series of Phase 2 trials for modakafusp alfa, our lead innate immune program, which will define its path forward in relapsed or refractory multiple myeloma.
Next slide 11 please. We continue to be excited about our proof of concept readouts to come over the course of the next two years. These are the first of many new molecular entities that could emerge from our rich and transformative early-stage pipeline and add to our growing list of late-stage development programs.
Next slide 12 please. Here are select expansion opportunities we have for our major brands. We expect to file TAKHZYRO for the prevention of hereditary angioedema in children ages 2 to 12 in the near future. This filing is based upon the outstanding data presented at the European Academy of Allergy and Clinical Immunology in July.
TAKHZYRO demonstrated an approximately 95% reduction in HAE attacks when compared to baseline. Most of these children averaged nearly two attacks per month before entering the trial, and a majority of them remained attack-free during the full 52-week treatment period, a result not seen with any other agent. And as mentioned, we also expect to file HYQVIA in the U.S. and EU as maintenance therapy for patients with CIDP, based upon the positive results announced just this past month.
So, next slide 13. We have some key regulatory approvals in Phase 3 readouts underway. Before we discuss our exciting data for TAK-003 in HYQVIA, we wanted to highlight upcoming data in Q2 for LIVTENCITY.
As Christophe mentioned, we extract the top-line Phase 3 LIVTENCITY data in first-line post-transplant CMV infection to read out in the second quarter. This trial compares LIVTENCITY against the current standard of care, valganciclovir in patient with first CMV infections following a hematopoietic stem cell transplant. In Phase 2, LIVTENCITY showed a numerically higher rate of CMV viremia clearance versus valganciclovir with a significantly lower rate of neutropenia at 5% versus 18%. Neutropenia is an independent predictor of mortality in stem cell transplant patients.
LIVTENCITY’s favorable safety profile, especially its lack of neutropenia represents a potentially significant therapeutic advance for these patients. The late-stage data readout shown here will allow for global filing in these indications with future label expansion opportunities to come.
So now let’s look at some of our data. If we can go to slide 14, please.
As Christophe noted, we are very encouraged by the final 4.5-year data from our dengue vaccine candidate TAK-003. The analyses are complete, and the new drug application has been submitted in the EU. Dengue is a rapidly spreading mosquito-borne viral illness. It has been defined as a top 10 health problem by the World Health Organization. While mortality from dengue is relatively low, severe dengue infection can be devastating for patients, sometimes leading to hospitalization.
For regions that experience a dengue epidemic, hospitals can become overrun with patients, requiring supportive care. And so, the secondary consequences for patients with other diseases can be substantial, not unlike what we have seen with COVID. There is an incredible unmet medical need, and we are ready to meet that need with a really good vaccine. Our 4.5-year data continued to support sustained efficacy. What we show here with patients at baseline who are seropositive or seronegative is an incredible 84% reduction in hospitalization. Hospitalization is an indicator of severe forms of dengue.
As we have seen with COVID, it’s not just if you can prevent infection but if you can prevent severe infection, it’s clear that we can do both with our vaccine. Now, the efficacy does vary by serotype. We have strong efficacy in serotypes 1 and 2 which are the most common. We have strong efficacy and serotype 3 patients with previous dengue infections. However, we have no efficacy and serotype 3 patients who are seronegative and to-date we do not have enough data and serotype 4 to draw conclusions.
Now, allow me to highlight the hospitalization data from the last 18 months of the trial in the lower right. We are most reassured by the zero hospitalizations seen in the seronegative arm for patients on TAK-003 versus placebo. We believe these data will be reassuring to physicians and importantly regulators. We are currently under review in the EU. We believe these data continue to support a favorable benefit risk profile and are hopeful for a positive decision in the next few months. If we can go to the next slide 15, please.
CIDP is a rare, autoimmune and inflammatory disorder that causes the demyelination and damage to peripheral nerves. The exact cause is unknown, but patients feel progressive weakness and impaired sensory function in their legs and arms, often leading to pain, fatigue and other symptoms. This is a chronic condition that requires long-term therapy. The treatment goal is to maintain durable remission with therapies such as IVIG. IVIG, of course, can have its own challenges due to the need for venous access by a healthcare provider. So, a facilitated subcutaneous immunoglobulin like HYQVIA should help address an important need for patients with CIDP. We are very excited by the positive results in this Phase 3 study.
In the ADVANCE-1 trial, the HYQVIA arm showed a significant difference in relapse rate compared with the placebo arm when used as maintenance therapy in CID patients, with a favorable safety profile. Importantly, most of the patients achieve these results with a once every four week dosing regimen using HYQVIA, which is less frequent than any conventional subcutaneous immunoglobulin on the market.
These data will be presented at an upcoming medical meeting and be used to file for approval in both the U.S. and EU later this fiscal year. So, we conclude with two exciting datasets that in the near future could bring new therapies and indications to benefit our patients.
Thank you. And I will now turn it over to Costa. Costa?
Costa Saroukos
Thank you, Andy, and hello everyone. This is Costa Saroukos speaking. It’s my pleasure to explain the fiscal 2022 first quarter financial highlights.
We are off to a strong start in fiscal 2022 with core revenue growing at 8.3% at constant exchange rate and 19.1%, when factoring in the FX tailwind. This strong performance was driven by global and launched products such as ENTYVIO, TAKHZYRO, and immunoglobulin as we delivered growth in all geographic regions. In addition, we also are excited with what we’ve seen so far in the new launches of LIVTENCITY and EXKIVITY.
Our reported revenue growth was 2.4%, impacted by the ¥133 billion gain from the sale of the Japan diabetes business that was booked in Q1 of the prior year. This onetime event is the only difference between reported and core revenue. Our core operating profit which excludes this divestiture gain, grew 17% at constant exchange rate to ¥319.1 billion for the quarter.
Our core operating profit margin was 32.8%, an increase of 2.3 percentage points on a year-over-year basis. This was partly because of the resolution of the ENTYVIO shipment [Technical Difficulty] we experienced in quarter four, and partly a reflection of our broad-based portfolio growth and focus on cost control.
Net debt to adjusted EBITDA remains at 2.8 times, despite the year-end dividend payment. And on all measures, we are on track towards the full year management guidance we provided in May.
Let me go into more detail on the Q1 revenue performance versus prior year on slide 19. On the left hand side, you can see a waterfall chart for reported revenue, which grew at 2.4% despite the full impact of the ¥133 billion we booked in Q1 of last year from the sale of Japan diabetes portfolio. Core revenue on the right hand side excludes this, and you can see our business momentum was driving 8.3% growth at constant exchange rate.
Foreign exchange has also been a significant tailwind for us due to the depreciation of the yen, adding over 10 percentage points of growth to core revenue in the quarter.
On slide 20, we show the drivers of reported and core operating profit for the quarter. Reported operating profit was ¥150.5 billion, a decline of 39.4% versus prior year. Again, the decline is predominantly coming from the sale of the Japan diabetes portfolio last year. However, because that was a one-off event in quarter one of prior year, the impact will diminish over the remainder of this fiscal year. And we have forecasted full year reported operating profit growth of 12.8%. Core operating profit was ¥319.1 billion, with our business momentum driving 17% growth at constant exchange rate and foreign exchange an incremental tailwind of around 11 percentage points.
On slide 21, you can see our growth by key business area. We have a balanced growing portfolio. Our growth and launch products continue to be key drivers, generating US$2.7 billion of revenue in the quarter and delivering 26% growth at constant exchange rate. GI, our largest business area by revenue, grew at 15% with growth of ENTYVIO across all markets, driven by continued share growth in bio-naïve patients. In rare disease, which grew 7%, we see continued demand growth and geographic expansion for TAKHZYRO as well as the successful new launch of LIVTENCITY. PDT Immunology continues to be very strong with 18% growth, which I’ll introduce in more detail on the next slide.
You will note that oncology business area is declining year-on-year as was expected, given VELCADE generics entered the U.S. market from May this year. Neuroscience continues to be strong driven by VYVANSE and TRINTELLIX. And the other segment has benefited from revenue from our COVID-19 vaccines in Japan.
I mentioned our strongest sustained performance in plasma-derived therapies where we have successfully navigated pandemic pressures. Looking ahead, we have considerable potential to continue to grow this business and extend the impact of our therapies to new patient populations around the world. This quarter is evidence of that.
Our PDT immunology business delivered revenue growth of 18%, tracking towards the high end of our full year guidance. Within this, our immunoglobulin portfolio grew at 22%,, fueled by increased global demand, coupled with steady and growing supply.
Our primary objective is to maintain continuity of patient supply, which requires consistent plasma volume growth as new patients are brought onto therapy. We have delivered plasma donation volumes above pre-pandemic levels for over one year and continue to build on this momentum. The growth of our BioLife network is a key fact that we added 8 donation centers in the U.S. in the first quarter, bringing our global donation network to 212. And we are on track to increase year-on-year donation volumes by 10% to 20% in fiscal year 2022.
The past two years have demanded that we do more with less plasma, and we have. We’re actively managing costs on a number of fronts to improve margins, including donor compensation. In quarter one, we reduced donor compensation by approximately 15% compared to a year ago, leveraging new data and analytics capabilities. We are also positioned to capture the full benefit of our digital and organization transformation to improve PDT business margins over time.
Slide 23 shows the net balance compared to the end of March. Free cash flow was ¥42.6 billion, reflecting a step up in CapEx that captures two oncology acquisitions, GammaDelta and Adaptate, which we completed in April this year. Also in April, we completed the share buyback initiated last year, and in June, we paid the second half the dividend for fiscal year 2021. Despite the dividend payment, the completion of the buyback and step-up in CapEx, we were able to hold net debt to adjusted EBITDA at 2.8 times.
On slide 24, you can see our debt maturity ladder as of June. We paid down ¥20 billion of USD denominated debt in April and still expect to pay down a total ¥500 billion of debt in fiscal year 2022. I’m very pleased with how we’ve structured our debt profile with a weighted average interest rate of approximately 2%. And importantly, 98% of our total debt at fixed interest rates. In fact, the only outstanding debt still at floating rate will mature this year. So, by the end of fiscal year ‘22, we expect to be at 100% fixed rates. This gives us strong protection from any potential interest rate hikes. Furthermore, the currency breakdown of our debt very closely matches our cash flows. So, we are also protected against major currency fluctuations.
On slide 25, we show the guidance we disclosed on May the 11th. We are on track and make no changes at this point. Our forecast is based on an FX rate assumption of ¥119 to the U.S. dollar and ¥133 to the euro. And if we apply the June end FX rates to the rest of fiscal year 2022, for example, ¥136 to the U.S. dollar, we would expect to see over 10 percentage points of incremental growth to our forecast for revenue, core operating profit and core EPS. To be precise, core revenue would be growing at around 19%, and our core operating profit and core EPS at 29% and 28%, respectively. We continue to expect to generate ¥600 billion to ¥700 billion of free cash flow. And finally we remain fully committed to our dividend of ¥180 per share.
To close out on the presentation on slide 26. I’d like to reemphasize the key elements of our strategy to deliver sustainable growth and value for our shareholders. We continue to see strong momentum from our commercial portfolio, which enabled us to deliver 8.3% core revenue growth at constant exchange rate. While we do face some loss of exclusively headwinds in the next two years, we expect momentum of our growth and launch products to support the top-line over that period.
Our margins are strong with 32.8% core operating profit margin in Q1, and we delivered core operating profit growth of 17% at constant exchange rate, well on track towards our full year guidance of high single digit.
And our success is built on our solid financial foundation. With robust cash flow that we will continue to allocate towards growth opportunities, continued deleveraging and competitive shareholder returns. We have abundant liquidity and a well structured debt profile of 98% fixed rates at an average cost of 2%, which positions us well in the changing macro environment.
In closing, we believe that Takeda is in a position of strength. Our Q1 results demonstrate a strong start to fiscal year 2022, and we are well on track towards our guidance for the full year. We look forward to taking your questions, and thank you for your time.
Question-and-Answer Session
Operator
Thank you. Now, I’d like to take questions. And we have Christophe, Andy, Costa, and Masato Iwasaki, Japan General Affairs with us in answering to your questions [Operator Instructions] There are so many participants today and so many people are raising hand. So, please limit the number of a question up to two per person. And please lay out all the questions, the two questions that you have at the beginning. Thank you for your cooperation and understanding.
And our first, Mr. Yamaguchi of Citigroup. You are raising your hand. Please go ahead.
Hidemaru Yamaguchi
Thank you very much. This is Yamaguchi from Citi. Two questions. The first question is regarding Q1 situations. You hinted that the full year number will surpass the full year guidance if you use the current currency. But, can you tell me even if you use the CER basis, I think your performance Q1 so far looks better than the full year number. So, can you give me the comment whether even using a CER, your Q1 may be better than the full year number and why? So, that’s the first question.
The second question is regarding 003 dengue vaccine. I understand hinted that there might be some decision within a few months, which is a really good comment. But, can you give me the why you think it’s a few months? You did have interaction with EU authorities, then you are now coming up to the conclusion just awaiting the decision from the EU, should happen within a few months. Thank you for the two questions.
Ayako Iwamuro
Costa, can you answer to the first question regarding the full-year guidance, whether you may be exceeding already in the first quarter?
Costa Saroukos
Firstly, let me say that we are very happy with the start of the year, our financials, our growth, even at a constant exchange rate, our margins really, we’re doing well. It’s good start to the year. Having said that, of course, we’re continuing to monitor the situation. In particular, the VELCADE generic penetration and erosion in the U.S. is something that we continue to look at. We had generic entry in May, so already in May of this year. So, we’re monitoring that situation. We have seven generics that have already entered into the market in the U.S. We also expect another 10 generics coming in, in the coming weeks.
So, obviously, this is something that we have factored into our forecast for the full year, but we’ll continue to monitor. And hopefully quarter two will be another strong quarter. And we can perhaps come back to you and update you accordingly there for the full year guidance.
Andy Plump
Thank you very much for your question on 003. I think you essentially answered your own question. Just to remind everybody, we submitted the original dossier to the special track in the EU, called EU-Medicines for all. And it’s a process whereby countries outside of the EU can actually leverage the opinion, if they choose. They can leverage the opinion from the EU. So, it allows the medicine to be made available well beyond the EMA countries.
We filed initially based on our three-year data set. And as we were engaging in discussions with the EMA, we made the decision to pause the file and include our 4.5-year data set. And as you saw from the data we presented today and as has been out in the public domain that 4.5-year data look quite remarkable and continued to support the overall benefit risk profile of the vaccine. So, we’ve now submitted those data and we’re going through a process of discussions -- ongoing discussions with EU, and we expect to have a CHMP opinion and hopefully a positive decision later this year.
Operator
Next question from Nomura Securities is Mr. Koutani.
Motoya Koutani
Two questions if I may, one is about ENTYVIO. So, when we look at the competitive landscape for IBD, it seems like there’ll be a lot of new entrants in the next two years. There’s Rinvoq, I think there’s Skyrizi received approval for Crohn’s disease in June. And within next two years, there will be Skyrizi in ulcerative colitis, I think mirikizumab from Lilly launching in ulcerative colitis, etrasimod from Pfizer.
So I understand that none of these drugs have really demonstrated a clear advantage over ENTYVIO, in terms of clinical remission or endoscopic remission, since that actually in IBD. I also understand that none of these new entrants are going to report head to head result versus Humira, like what ENTYVIO did with trial. So, we’re relatively confident that ENTYVIO will maintain growth, but is Takeda worried about ENTYVIO growth possibly slowing down in the ‘23 to ‘24 timeframe when VYVANSE is going off patent? That’s the first question.
The second question is about the pipeline. Specifically, modakafusp alfa and subasumstat, because curious, because both of these drugs involve interferon and very interesting. For modakafusp alfa, there’s a trial for combination therapy with KEYTRUDA in solid tumors, specifically melanoma. It says the trial ends in 2023 August. Since interferon is likely to strengthen PD-1 activity, if we see any OR are in primary PD-1 resistant melanoma, we wouldn’t have to consider POC, why isn’t this listed on page 10 or 11? For subasumstat, I assume we’ll be seeing results in MSSCRC first and then NSCLC in cervical cancer later, I couldn’t find much scientific evidence to corroborate the involvement interferon specifically in MSSCRC, how confident is Takeda in showing activity in this very difficult subset? Those are the two questions. Thank you.
Christophe Weber
Thank you very much for the question. It’s Christophe here. I think, you know well the IBD market. And ENTYVIO has established a very strong track record of efficacy and safety since its launch more than seven years ago. We have established also superiority against TNF alpha. And the TNF alpha class still has a very significant market share. And this market -- so there is still a lot to do. And today we are the leading therapy of choice for bio-naïve patients. So, we are very much aware of the competition. It’s a very dynamic market. But we believe that ENTYVIO is extremely well positioned. We have not seen a product which has any demonstration of superiority. So yes, there will be more competition, but this is also a disease where there is a lot of churn among treatment, but still a lot to do to continue to establish the best standard of care, which is ENTYVIO today, when you think that the TNF alpha class still has a very significant market share in this market.
So, very confident about ENTYVIO. We also plan to launch a subcutaneous formulation in the U.S. in the coming years that will add more dynamic also to the product. So very confident about the continuous growth of ENTYVIO in the future.
Andy Plump
And Koutani-san, thank you very much for the questions about modakafusp alfa and subasumstat. And as you mentioned, these are both agents that work, at least in part through an interferon alpha based mechanism and are representative really of our oncology strategy to focus on innate immune mechanisms. Firstly, for modakafusp alfa, our focus right now is really on melanoma where we’ve seen very compelling evidence of clinical activity in highly refractory patients. And so, our focus for modakafusp is in building out that profile in refractory patients and also moving up in lines of therapy through combination therapies. And so, we’ll be starting over the course of the next few months combination initially with daratumumab and then with other agents.
The studies that you’re mentioning in solid tumors are still quite exploratory. We’re still in the process of understanding dose, safety profile. So, we’ve been hesitant to define a date for when we might have POC because we’re still working through a number of issues.
With respect to subasumstat, which is also a really exciting mechanism that works at least in part through interferon alpha signaling, and we’ve published quite extensively on the translational data that we’ve seen in humans in terms of immune activation with this mechanism. Our challenge has been understanding where exactly to target and to what tumor. And so, we’re looking across a range of different tumor types. The three that are most actively enrolling right now are combination studies on top of PD-1 inhibitors. The first is in microsatellite stable colorectal cancer, we’re also looking at non-small cell lung cancer and of course, in melanoma.
And the first data set that will have readout will be in a microsatellite stable colorectal population. It’s an incredibly challenging population to see benefits in. So, we’ll wait and see what that data set looks like. We actually had some partial responses in our Phase 1, Phase 2 study, which is the -- you asked about rationale, that was the rationale for proceeding in that difficult population. I think, our focus, given the biology will be more on the melanoma and non-small cell lung cancer populations.
Operator
Next is Georgi-san, [ph] Cowen.
Unidentified Analyst
So, just a couple on our end. Maybe starting with the positive HYQVIA results in CIDP. Could you discuss the total opportunity and growth prospects in immunoglobulin, for immunoglobulin in the space, especially in light with CSL’s sub-Q [indiscernible]? And just in general, how do you see the market being segmented and evolved over time? And the second one is on the Arrowhead collaboration? We noticed that the Phase 2 placebo controlled study results are expected sometime in the fall time, according to clinicaltrials.gov. Do you expect to present these results at an academic conference? And can you just walk us through the next steps of -- towards regulatory filing and opportunity here? Thank you so much.
Christophe Weber
Look, the immunoglobulins are well known to treat CIDP. So, this is this is not a new as such a treatment. But what is new in the case of HYQVIA is that it’s one of the most convenient subcutaneous formulation. And we believe that that will really help patients to -- with the treatment. And we don’t have the indication of CIDP in the U.S. We don’t have it for our IV as well as for our sub-Q. We believe that nevertheless, our products are used but we never have the indication. So I think it’s really great for us first to be able to have this -- to file this indication for HYQVIA.
And again HYQVIA is a very competitive device and a very competitive formulation, very convenient for patients. We think that the efficacy combined with this convenience will be a big add and a big plus for the patients.
The CIDP indication overall, let me remind you that overall, the CIDP indication represents about 20% of the overall immunoglobulin market, globally.
Andy Plump
On the Arrowhead TAK-999 question, so just again, to remind you, just the data that we’ve seen so far in the open label study, ongoing open label study has been just so remarkable in terms of the percent knockdown. We’re seeing 90% knockdown of the mutant alpha-1 antitrypsin RNA. We’re seeing almost 85% knockdown of the mutant protein aggregate. We’re seeing trends towards reductions in liver function tests. And on biopsy, again, non-controlled setting, but we’re seeing actually a regression in fibrosis over very short time periods of 24 and 48 weeks. And so, the data that we’ve seen to date are compelling enough to drive a go decision for a pivotal study.
The placebo-controlled, blinded Phase 2 data that will be coming out later this year, of course, that -- those data will be presented at Congress. But it’s important to note that those -- that study’s being run by our collaborator Arrowhead. So, they will be responsible for that presentation. I think that dataset will be important in helping us further understand the overall profile of the molecule. But we believe based on the data that we’ve seen so far that we have enough compelling evidence to move forward.
We strongly believe that we’re going to need a full Phase 3 study to -- for approval. And our hope is that we’ll be starting that Phase 3 study this year. The specific endpoints for that study, we’re in the process of discussing those with FDA and other agencies.
Operator
Next question from J.P. Morgan Securities, Mr. Wakao. Please unmute yourself.
Seiji Wakao
My first question is about PDT business and the cost structure. Compared to the fourth quarter this first quarter cost has improved and you showed the donor fee lowered. And when do you expect the result of lower donor fee impacting positively on cost? And this donor fee, lower donor fee, is that incorporated into your guidance for the year?
And the second question is regarding SG&A. The first quarter SG&A, in spite of cheaper yen is well controlled. That’s my impression. I’m aware you are not specifically disclosing SG&A. But can you comment of the current situation against your plan. And there could be some negative impact from yen depreciation going forward. But, do you think the first quarter trend in SG&A will continue to the second quarter? Thank you.
Costa Saroukos
Thank you very much Wakao san for your question. Now, on the first one, on the PDT reduction -- and we firstly don’t disclose margins, but what I can say is that the reduction in the donor fees has been factored into our full-year guidance. So that’s one thing.
On the SG&A controls, you’re right. We’re seeing a reduction overall in SG&A predominantly, predominantly driven by the investments that we’ve done in the past and currently on data, digital and technology. In respect to sales and marketing, we’re leveraging data, digital technology in particular around omnichannel, targeting with physicians et cetera. And on the G&A side, we’re seeing some significant savings coming through. Again, leveraging data, digital technology, automation, and leveraging our Takeda Business Solution Centers, where we are increasing the number of back office transactional activity in particular around HR, procurement and finance. And that’s helping overall improve productivity and efficiency. So, we’re very pleased with the progress there. And we’ll continue to manage this moving forward.
Operator
Next question, Daiwa Securities, Hashiguchi san, please?
Kazuaki Hashiguchi
This is Hashiguchi. Thank you very much. I have one question regarding your COVID-19 vaccine sales. I understand that the full-year forecast is ¥50 billion. And what is the revenue in the first quarter? And the latest forecast, do you think that it’s likely that you’ll be exceeding ¥50 billion?
Costa Saroukos
Revenue for the first quarter was ¥19.4 billion, which is a combination of both SPIKEVAX and NUVAXOVID. At this stage, we’re holding on the target of the ¥50 billion. So, no further update at this stage. But we’re very happy with the start of the fiscal year. So that’s where we’re tracking, ¥19.4 billion for Q1, and we’re maintaining the guidance of ¥50 billion for the full year. Thank you.
Operator
Next question, from Credit Suisse Securities, Mr. Sakai.
Fumiyoshi Sakai
[Indiscernible]. The first quarter seems to be little bit lower than what actually are expectations, and when we see the spike in the sales trend going forward. Now, you mentioned about important first indications for both drugs. But that’s the way. So, what’s going to be trigger for the spike in the share price -- I mean, the sales trend for these two important, supposed to be important new products. That’s the first question.
And second question is TAK-861. If I’m not mistaken, you are going to have the internal readout of the Phase 1 data sometime in August. And once you find any new -- if it’s a good result or bad result, what you -- what is your plan to disclose the outcome of this readout? That’s my two questions. Thank you
Christophe Weber
Thank you, Sakai-san. It’s Christophe here. So, I think, we are not disappointed at all by the Q1 actually. We are very pleased with the uptake. But you need to -- when you launch a product like LIVTENCITY, first you need to have the product reference in the different transplant center. I think we have achieved that very, very well. The majority of the transplant center on our reference, LIVTENCITY, and 56% of the 314 transplant centers in the U.S. have already used it. So, it will take a while to translate that into revenue, but it will happen. And then, of course, the first-line is a key here. The majority of the value will be in the first-line indication. So, we’ll see it starting next year and the year after. So, that’s LIVTENCITY.
Keep in mind also that LIVTENCITY overall potential, revenue potential is higher than EXKIVITY as well. And on EXKIVITY it’s also -- the first-line is also very critical. The first-line indication is also very critical. This is where there is a highest market value. So, I think this product will be successful. The early signs are very strong like this two products will be very successful. We just need to have the full set of indication to translate that into revenue potential.
Andy Plump
And Sakai-san on TAK-861, just to be clear, and I’m sorry, if there was a misunderstanding, we will not have a data set that will enable us to make a decision, a go, no go decision in August. What we’ve disclosed is that we’ll have a decision, a go, no go decision by the end of this year. So, just so that we’re clear in terms of timelines.
Fumiyoshi Sakai
So, end of this year, that’s what you’re saying right now?
Andy Plump
That’s right. And that’s I think what we’ve been guiding all along. Nothing’s changed since we made the transition from 994 to 861 in terms of our acceleration. And the data set that will enable this decision will be healthy volunteers sleep deprive data, and then also Type 1 narcolepsy patients treated for a month. So, we’re in the process of accumulating that blinded data set now.
Operator
Next is Goldman Sachs. Ueda-san, please.
Akinori Ueda
I have one question. Question for the narcolepsy franchise. The Company decided the discontinuation of the development TAK-994 based on the clinical data. So, could you share your thoughts on the factors behind the development suspension for the TAK-994? And whether you think those factors will affect the safety profile of TAK-861?
Andy Plump
Thank you very much. So we discontinued TAK-994 because of drug induced liver injury signal that we don’t believe is class related or mechanism based but molecule related. TAK-861 is a unique molecule with a very different profile to TAK-994. It’s a much more potent molecule and it has a very different exposure profile. So, part of what we’re doing in the context of our Phase 1 studies is we’re trying to understand what the overall profile of TAK-861 and whether it’s going to have an efficacy and safety profile that’s going to be distinct from TAK-994. And that will be what will drive the go, no go decision into Phase 2.
Ayako Iwamuro
Thank you very much. It’s time to close. So, with this, we’d like to close today’s webinar. Thank you very much for your participation. And when you have further questions, please contact IR members regarding the financial situation. Thank you very much for your participation today. With this we disclose today’s conference call. Thank you.
Andy Plump
Thanks everyone. Bye for now.
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Takeda Pharmaceutical Company Limited (TAK) CEO Christophe Weber on Q1 2022 Results - Earnings Call Transcript