Good day, everyone, and welcome to the Conference Call of Takeda Pharmaceutical Company Limited. This conference call may contain forward-looking statements, beliefs or opinions regarding Takeda’s future business, future position and results of operations, including estimates, forecasts, targets and plans for Takeda. Any forward-looking statements in this conference call are based on the current assumptions and beliefs of Takeda in light of the information currently available to it. Such forward-looking statements do not represent any guarantee by Takeda or its management of future performance and involve known and unknown risks, uncertainties and other factors. Takeda is currently in offer period with respect to Shire Plc. Please carefully read the information on Slide 2 of the presentation as it contains important information. During the presentation from the Company, all the telephone lines are placed for listening mode only and a question-and-answer session will be held after the presentation. Now, we’ll start the conference. Mr. Okubo, Please go ahead.

[Foreign Language] Thank you very much for joining our 2018 Q1 Conference Call despite your busy schedule. I am the facilitator of this meeting today. I am Head of IR. My name is Okubo. The presenters and also responders to the Q&A includes the present CEO, Mr. Weber, Chief Financial Officer, Costa Saroukos; and R&D Integration Head, Christopher Morabito. Those three are joining with us. First, we’d like to have the presentation from Costa Saroukos, the CFO of the Company about the outline of the Q1 results, and then, we will have the Q&A session. Now, please prepare the presentation slide as per this conference call.

Thank you, Takashi, and hello everyone. Thanks for joining Takeda’s quarter one conference call. Please turn to Slide 3 in the Slide Deck. I am pleased to announce that Takeda’s strong business momentum continues in 2018. This year, we have continued to make solid progress against our key priorities to grow the portfolio, strengthen the pipeline, and boost profitability. I will introduce some business highlights on the next slide. With regard to the financials, we made a very strong start on underlying revenue and profitability led by our growth drivers and disciplined OpEx initiatives. For reported operating profit and EPS, as expected, growth was impacted by two large transactions we did in quarter one fiscal year 2017. First, we booked ¥106.3 billion, one-time gain on the sale of Wako shares. Second, we benefited ¥16.8 billion from the second tranche of long listed products we sold to the Teva JV in Japan. If you exclude these two large exceptional items, reported operating profit grew 37.5% and reported EPS grew 32.6%. On the bottom right of this slide, you can see our strong underlying performance with revenue up 6.4%, underlying core earnings grew substantially by 40.3% and underlying core EPS was up 51.1%. Slide 4 shows progress against our key priorities. In Grow portfolio, underlying revenue was solid at 6.4% with growth in every region. Takeda’s growth drivers of GI, Oncology, Neuroscience and emerging markets continued to drive the top-line increasing by 11.8%. We continue to look at optimizing the portfolio through business development and in June, we acquired TiGenix to strengthen our leadership in GI. We have treated our first patient in Europe and we will strive to make it available to patients in other regions as quickly as possible. We have also been active in divesting non-core businesses and within…

[Operator Instructions] The first question is from Seki, UBS. Please go ahead.

Hello, this is Seki, UBS. So thank you for taking my question. So, I have two questions if I may, so number one, what’s your updated thought on timing for the EGM, Extraordinary General Meeting? If you have a plan or date, when do you plan to communicate that date for the financial community? Then number two on VELCADE. So what’s your rate – sold on VELCADE generics? So, do you still expect some generic to hit the market by September, so if I check the FDA website so it seems like be no other generics been approved by FDA. Thank you.

Thank you, Seki. It’s Christopher Weber, yes, I’ll take the first question and Costa will cover the VELCADE generic. So, the date of the shareholder will depend on the regulatory approval that we need to obtain from the different authorities. So we obtained the U.S. FTC approval which is a great news and it was also very fast. Now we need to progress in Europe, Japan, China other authorities and other countries. So, a bit too early to give you a date, also of course for us just sooner is better, but we are dependent on these authorities.

Thanks, Seki for your question regarding VELCADE. Our financial assumptions for VELCADE is based on one additional therapeutically non-equivalent competitor launching in September 2018 with both IV and subcutaneous administration. Our assumption is not based on public information. It’s not that the FDA nor the other companies have made any announcement as of yet. But depending on the competitive landscape, it could be potentially an upside there. So we continue to monitor the situation but even – just want to draw your attention, even if it is therapeutically non-equivalent, if our competitors approved as a subcutaneous and we will take potentially modest pricing cuts, which will have an impact on our share, on our market share and loss of VELCADE revenue.

Thanks so much.

Thank you very much. Next question please. The next question is Cairnes from Deutsche Bank. Please go ahead.

Good evening. Thanks for taking my questions. Jo Cairnes from Deutsche Bank here. I have three questions. First on the tax rates, you mentioned it’s low due to the possibilities of an uncertain tax revision. Just wondering if you can give us an idea of how big this was in relation to what and how much is left? The second question would be on G&A costs. If we are stripping out the ¥4.6 billion of G&A booked to the M&A-related expense the underlying is down some 4% year-over-year or it’s a one percentage point improvement to the European margin? Could you give us an idea of where this is coming out? So, I mean, you mentioned videoconferencing. But it would be great to hear in a bit more detail about the global OpEx initiative and - and how you Costa are pushing this forward? And then final question for – on Slide 19, you are talking a bit about the efforts that you are making in preparation for the Shire acquisition. Just wondering how – well, if you could discuss these in more details. How you guys are allocating your time between the Shire M&A deal and your normal management roles, how you are delegating to the different teams in charge of the process? So they are my three questions. Thank you.

Thanks, Jo, for the questions. I’ll answer the first two and then I’ll hand it over to Christopher to talk about the time spent in the Shire acquisition process. So firstly, with regards to the quarter one tax rate, we had a favorable from a reported tax rate perspective, we had a favorability of 10 percentage points. And it was driven by mainly two areas, favorable statutory earnings mix. So we had larger gains in Japan in fiscal year 2017 and lower U.S. tax rates in fiscal year 2018. We also had a transfer pricing negotiation of an advanced pricing agreement which we received positive news. So that was in the vicinity of around ¥60 and that was partially released due to the favorability of the outcome there. So, these are the two key elements that has given us a positive tax rate – effective tax rate for both reported and also the underlying tax rate. Now, that being said, we still believe throughout – this will true up towards the average tax rate for the full year because we expect less R&D credits coming through in Japan in the latter half of the year and so that will pretty much smooth the phasing of that back to our normal tax rates that we’ve communicated at our forecast for 2018. With respect to G&A, maybe I can just start by saying that, we have integrated our overall global OpEx initiative within the ways of working. So what that means is, we’ve rolled out the Zero-Based Budgeting process, it’s linked now to a overall budget by our system. We have also enhanced the overall KPIs of much more transparency on a monthly basis. And then, more importantly, we’ve also factored the objectives of the targets of the cost –the overall OpEx and cost packages that now part of the senior management organization in their own individual objectives. So, it’s a end-to-end process whereby we are fully focusing on transparency, accountability, as well as agility to make these improvements in the overall OpEx. So the ¥4.6 billion that you refer to was coming out of SG&A and we were able to absorb most of that throughout the first quarter and it’s too early days. It’s through only the first quarter. We – some of it was phasing, but we also do believe that it’s encouraging signs. And I believe that the organization has been fully integrated to price OpEx and we will update you in the coming quarters once we feel these further improvements.

Great, thanks. And for the further question regarding how we are getting organized were, of course everything is conditional to the approval, but what we are doing is that, on one side we don’t want to distract our business as usual. So, whether decisions are made or committees that we have to make decisions, so - it’s not distracted. So we continue to drive our business. So that’s very important. In parallel, on the other hand, we are starting to look at preparing the integration. We have set up some integration team on the different functions and this integration teams are now working in twenty different areas from both Takeda and Shire and we are starting to plan what could be the integration and to start planning for that. So I think that’s progressing well and both companies have their integration lead which has been nominated. So we are starting to map what the integration would look like, but also strategically how we could get organized in the future. So it’s work in progress which is very much in parallel of our business as usual. So, our business as usual is not distracted by this.

Great. Thanks very much.

Thank you, very much. The next questioner please? The next question is from CLSA Securities. Please go ahead.

Hi, it’s Steve Barker from CLSA. I have two questions. The first one is about your P&L on Page 8 of the English punching. I am looking at the other operating income of ¥9.3 billion and then other operating expenses, a positive ¥1.4 billion. Could you please explain in a little bit more detail, what’s actually in those two numbers, please?

Sorry, Steve. Which page are you referring to?

It’s the consolidated – interim consolidated financial statement, and major note it’s on Page 8 of the – of the financial statement, the English version. So, I am just, - be interested, so you had the other operating income of ¥131 billion last year which was mainly from Wako and in this year, you’ve got 9.3 which, I think you mentioned something about real estate sales.

Yes, so, you are right. So, from the operating profit point of view, we had a significant impact on the gain on sale of Wako 1006 Oku Yen in 2017 which we are not obviously getting in 2018. In 2018, we have a gain on sale of property, plant and equipment and that’s mainly 58 Oku Yen driven by the sale of land in Dosho, in Osaka, okay. And then, we have some other in the expense line, we have some expenses there in restructuring expenses in 2017 of around 65 Oku Yen and it’s relative to approximately 60 Oku Yen in fiscal year 2018 for June quarter. The other key drivers that we highlighted in Q1 results there.

Yes, but the Q1 number is actually positive. So, I mean, what is that? Is that something like reversal of operating expense number?

So, regarding the - that's got to do with the prelaunch inventory reserve. So the prelaunch inventory reserve relates any products that have not been – we haven’t received FDA approval or marketing authorization approval. Basically, what happens there, it’s the expense line. It’s the operating expense line until we get approval for that, once we get approval for that, it gets reversed and restated to cost of goods.

Okay, got it. Thank you. And then, my second question is about the – I am looking at Slide 19 in the presentation. The cost of the Shire deal in the Q1, so ¥4.6 billion G&A, financial expense of ¥6 billion. I mean, when you reported your forecast for the current year in May, this deal was underway already. So I am just wondering what is in your forecasts for this deal in terms of G&A and financial expenses inside your full year forecast?

Yes, that’s a great question. As I mentioned in our presentation, the full fiscal year forecast does not change despite the ¥10.6 billion that we’ve already absorbed in quarter one. Based on our strong momentum that we saw in the OpEx discipline we were able to absorb that in the first quarter. But, we expect to close the deal in the first half of calendar year 2019 and the full year – of fiscal year 2018 estimated financial impact of the deal would also depend on the speed of progress. So, our forecast at the moment, we haven’t been able to identify the full – because it’s a bit of a moving target. So, the forecast at the moment is, we’ll come back to you and announce what the overall impact will be at a reasonable time juncture.

So, there is nothing in the forecast right now?

Yes, so, basically, what we are saying is, the forecast – the full year forecast has not changed from what we presented in the outlook in May and the forecast that does include the estimated financial impact on the deal for the full fiscal year 2018 will be announced once a reasonable assumption has been confirmed.

Okay, thank you.

Thank you very much for your questions. Now, I would like to take other questions please. The next question is Sakai from Credit Suisse. Please go ahead. [Multiple Speakers] [Foreign Language] [Interpreted] Yes, please go ahead. Ask your question in Japanese. First question is a simple one. Non-core assets divested, from the second quarter onwards, can you – Sakai you are in the line in English, so you have to ask questions in English please.

You have divested the investment so far. It’s been rumor, comment on rumor that my question is, do you have in your description agreement when you and Shire how to divest non-core assets.

I am not sure. No, I am not sure I – and you are not so clear on the line, Sakai, but in the agreement with Shire, there is no agreement about non-core asset disposal. So it’s really something that we have to do based on the strategy we want to follow. I hope I answered your question, because I am not sure how I understood well your question.

You are kind of breaking up. It’s very difficult to have – so we’d like to move on to take other questions. So going back to the operator please. Next questioner from Daiwa Securities, Mr. Hashiguchi. Mr. Hashiguchi, please. [Interpreted] I am Hashiguchi. I have only one question regarding Brigatinib. Earlier, when you acquired ARIAD, Brigatinib peak sales potential was estimated at more than $1 billion per year or more. Has it changed still? Or front-line Phase 3 study readout was already available. So what kind of impression do you get? And also, updated competitors of clinical trials, how do you see their data? And according to the data book, Brigatinib lifecycle management trend is underway of revisiting. So, peak potential sales, is this review going to impact on the peak potential sales of this product.

Thank you for the questioner. We are actually – overall, extremely satisfied with the ARIAD acquisition. We – Brigatinib data will be disclosed at a later stage at the global congress. But in our mind it still has the potential that we saw when we acquired ARIAD as being one of the best-in-class ALK inhibitor. So at the present time, we are absolutely confirming the potential of sales above US$1 billion. We are seeing also – performing very well and we will do further lifecycle management to strengthen the product and we have also 788 in the pipeline which is progressing. So overall, on the ARIAD front, all the traffic lights are green and doing very well.

Thank you very much. So, now, I would like to take the next question. The next question is from Sakai from Credit Suisse. If you have questions in Japanese, Please go ahead. Next question is from Sakai from Credit Suisse, go ahead please.

So, there was a confusion, can you hear me now?

Yes, it’s very clear. Thank you. Please go ahead.

So, the previous question was answered. So there is no restriction whatsoever about non-core asset divestiture. So, divestiture of each side reciprocates.

No restrictions.

Okay, thank you. I have another question, which is simple R&D update related question. Today, you didn’t give us an update on R&D. So I wanted to ask you this question. Relugolix TAK385 for prostate cancer, Phase 3 readout in Japan, when it’s going to be? Myovant is starting a Phase 3 and that’s readout is very close and do you have an option for the U.S. market? I think, this is very close to your expertise. So could you please update on this?

Thank you, very much. This is Chris Morabito from R&D. The bulk of the Relugolix activity is being handled by Myovant, as you know, but we do retain active interest in developing this for prostate cancer. The trial is going well. We can’t give an update on the date of the data at this time because of the way the clinical trial is designed. Frankly, I wasn’t aware of your keen interest in this study and we could provide you some additional information if that’s your focus area. Overall, we are quite pleased with the progress of our relationship with Myovant on this study and Myovant as well, could provide you some additional context if you are so desired.

Yes, thank you very much please do so. Thank you very much and I am really sorry once again about the confusion. Well, thank you very much for joining us anyway.

Now, let us move on to the next questioner. Next question is from Merrill Lynch Securities, Mr. Watanabe.

[Interpreted] Good evening. I am Watanabe. Do you hear me? Yes, clearly. Thank you. I have three brief questions, one of which is about the Shire acquisition related cost. Sorry to repeat this question, but, ¥10.6 billion is extraordinary cost for this quarter. And through year, expenses for fiscal 2018 should depend on the speed of the deal closure. So I understand that you don’t know the exact amount. But what is the assumptions of the total amount for the acquisition-related cost at the closing? And the second question is about the non-core assets divestitures, when you consider the standalone Takeda operation, Brazil, China, and also real estate and securities divestitures have been going. So we are concerned that you’ve already used up all of the instruments. So from fiscal 2019 and onward, non-core assets can be divested furthermore from fiscal 2019 and onward as a standalone Takeda? And the last question is about the R&D Day. You scheduled September 27th and October 10. We are looking forward to that and I understand that you cannot talk about the Shire’s pipeline. But when you consider a new Takeda, we are very much keen about the U.S. strategy going forward. So, you have two separate R&D days. What kind of message are you going to communicate to the market or existing shareholders? To what extent, what can you tell us, so, as just a preview, could you talk about that a little bit here?

Okay. So, it’s Costa here. I’ll answer the first question regarding the Shire acquisition-related cost for the quarter one and full year and I’ll hand it over to Christophe to talk about the non-core assets and then Chris to talk about the R&D Day. So, as I mentioned today, the ¥10.6 billion deal-related cost was predominantly driven by advisor fees and banking fees et cetera. So, this was – the great news is that, we were able to absorb that cost and no changes to the forecast for the full year. Our forecast, as I mentioned for the full year will depend on the time that we close. So, it’s difficult to come to you right at this stage with a final number. But, at some – at a reasonable juncture in the coming months, we would have an opportunity to share that with you in more detail.

So, on the non-core assets, I mean, first, you are right. We did some disposal in the past acquire strategy like Wako. There is still some opportunities to do that. We did Multilab in Brazil recently. Techpool in China even more recently. I cannot disclose what is our internal list, but there are still some areas which are not within oncology, neuroscience area. But also we have many – because of the historical businesses we have many products outside of these areas. So we don’t – we just don’t look only at that, but we look at businesses which we think are underperforming or businesses that which could be in better - managed better, managed by other companies. So, we’ll still have some room for doing that. And on the R&D Day, I mean, we’ll only be able to comment on the Shire pipeline after closing. So before closing, we cannot of course comment on the qualitatively let’s say on the Shire pipeline. So after closing, we will have of course another R&D Day, by combining the two pipelines. But we – what our goal with the upcoming Takeda R&D Day, is to share with you how our R&D transformation that we have initiated three years ago is really starting to deliver and to gain momentum and how our pipeline has progressed but also, what is our R&D model, our R&D engine that we have built over the years. How it’s starting to deliver. And this is very important in the context of Shire as well, because this R&D engine will be the R&D engine – will be the model that we will leverage with after Shire acquisition. And so – and as we have announced already, instead of focusing on three therapy areas, we’ll focus on four by adding rare disease, but it will be pretty much the R&D engine and the model that we have built in the last four years. So at this R&D Day, we will share with you how it has progressed and how it’s starting to deliver. So I think it will be quite interesting.

Thank you very much. So, with this answer, I would like to close this Q&A session, because it’s already 6 P.M. So with this, we conclude the conference call. So once again, thank you very much for joining us despite of your very busy schedules. And I ask you for your future support. Thank you very much.