[Interpreted] Thank you very much for joining us today despite a very busy schedule for this FY '23 Q1 earnings announcement. My name is O'Reilly, I am the Head of IR. I'll be the master of ceremony for today's meeting. [Operator Instructions] 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 our other SEC filings. Please also refer to the important notice on the Page 2 of the presentation regarding forward-looking statements and our non-IFRS financial measures, which will also be discussed during this call. Definitions of our non-IFRS measures and reconciliations with comparable IFRS financial measures are included in the appendix in the presentation. Please also note the important notice is on the Page 2 of the presentation material. Now we would like to start the presentation. Today, we have President and CEO, Christophe Weber; R&D President, Andy Plump; Chief Financial Officer, Costa Saroukos presenting to you. This will be followed by Q&A session. Now we would like to begin. Christophe, please go ahead.

Thank you, Chris. Thank you, everyone, for joining us today. It's a pleasure to be with you all. Our performance in the first quarter of this fiscal year again underscores the strength of our business and our ability to continue to deliver life-transforming treatments to patients and communities over the long term. Looking at our financial results. In the first 3 months of fiscal year 2023, revenue was JPY 1.06 trillion. Year-over-year growth at a constant exchange rate was plus 3.7%, driven by momentum in our growth and launch products, which represent 40% of total revenue and grew in this first quarter at 16.2%. At actual exchange rates, our top line growth was 8.9%. Our top line performance contributed to core operating profit of JPY 326.3 billion. The year-over-year decline at constant exchange rates reflect the impact of loss of exclusivity and lower coronavirus vaccine demand as well as our strategic investment in R&D and data and technology to ensure Takeda long-term competitiveness. Core EPS for the period was JPY 150, flat versus prior year at a constant exchange rate. On a reported basis, EPS declined due to the impact of onetime financial income gains in the first quarter of last year. Our results at constant exchange rates are tracking well against our full year management guidance for fiscal year '23, and there is no change to our guidance at this time. Moving to the right of the slide, we are advancing our innovative pipeline to reach new patient population, address unmet needs and provide new treatment options to improve patient outcome and quality of life. Our dengue vaccine, QDENGA, was recently approved in Argentina and Thailand, and we are pleased with the momentum we are seeing in both endemic and travel market. I will discuss QDENGA further on the…

Thank you very much, Christophe, and a big hello to everyone on today's call. If we go to next slide, please. Our pipeline continues to advance, including considerable progress with the TAK-279 and orexin franchises, which we will describe later in this presentation. This quarter, the rest of our pipeline featured a number of incremental but important program milestones and a few small headwinds. As Christophe just mentioned, important regulatory milestones include filing fruquintinib in both the U.S. and EU for metastatic colorectal cancer, filing TAK-755 in again the U.S. and EU for congenital thrombotic thrombocytopenic purpura or cTTP, and finally, GAMMAGARD LIQUID in the U.S. for chronic inflammatory demyelinating polyneuropathy, or CIDP. Fruquintinib and TAK-755 are granted priority reviews by the FDA, reflecting their potential for increased effectiveness and/or better safety in areas of high unmet medical need. If approved, TAK-755 would be the first available therapy for routine prophylaxis and congenital TTP. Supporting these and other programs were a number of key publications and presentations. These include HYQVIA's Phase III ADVANCE-1 study results, demonstrating an approximate 10% relapse rate with HYQVIA. This is the lowest relapse rate observed in CIDP maintenance studies across mechanisms. Fruquintinib data from FRESCO-2 was published in The Lancet and showed a greater than 30% increase in overall survival versus the control arm in patients with metastatic colorectal cancer. In June, TAK-755 data were presented. These data demonstrate a reduction in the incidence of thrombocytopenia by 60% versus the standard of care and no acute TTP events were observed. And also in June, updated data from the Phase II SEQUOIA study of fazirsiran was presented at the European Association for the Study of Liver Congress or EASL. Fazirsiran continued to demonstrate a dose-dependent reduction in the pathological alpha-1 antitrypsin Z-AAT protein in both serum…

Thank you, Andy. And hello, everyone. This is Costa Saroukos speaking. Today, I'll walk you through the financial highlights of our fiscal 2023 Q1 results. Starting with the top line. Revenue was JPY 1.06 trillion or USD 7.3 billion, delivering strong growth of 3.7% versus prior year at a constant exchange rate or 8.9% on an actual basis, reflecting foreign exchange upside from the depreciation of the yen. Our top line performance was driven by our growth and launch products, which represents approximately 40% of total revenue and grew at 16.2% at constant exchange rate. Core operating profit was JPY 326.3 billion or USD 2.3 billion with a core operating profit margin of 30.8%. Reported operating profit was JPY 168.6 billion. We continue to see stable cash generation from the business with operating cash flow up 9.7% to JPY 92.4 billion. Free cash flow is negative at minus JPY 207.5 billion, reflecting JPY 223 billion cash out for acquisitions and in-licensing, including TAK-279 and fruquintinib, which occurred in Q1 as expected. Importantly, I want to note that there is no change to our full year free cash flow forecast of JPY 400 billion to JPY 500 billion as these deals were already included in the forecast which we gave in May. I'm also happy to announce that Moody's recently upgraded our credit rating from Baa2+ to Baa1 stable. This is important to highlight because it's a reflection on the strong financial foundation of the business with our robust cash flow outlook and manageable debt profile with 100% of debt at approximately 2% fixed rates. With regard to the outlook for full year 2023, there is no change from the guidance we presented in May. As we flagged since the start of the year, starting from Q2, we expect to see…

[Interpreted] Thank you. Now we would like to take questions from the participants. And in the Q&A session, Christophe, Andy, Costa and Ramona Sequeira, Global Portfolio Division President; Julie Kim, U.S. Business Unit President; Giles Platford, PDT Business Unit President are also joining. [Operator Instructions] The first question from Yamaguchi-san Citi Group, please.

This is Yamaguchi for Citi. So I have 2 questions. The first question regarding your comments on ENTYVIO. You talk about the market is a little bit slow, and there's a price pressure in Europe as well, and also there is some kind of an [indiscernible] effect of inventory building up. Can you elaborate a little bit, especially in the United States, which is the core market of this product, is weak. What is the case? Is it coming from the HUMIRA or other biosimilars coming to the market or it just needs related to the COVID? So that's the first question on ENTYVIO market weakness -- sorry, ENTYVIO weakness comments. That's the first one. The second one is regarding 994 on the New England Journal of Medicine, it is really efficacious, which is really unfortunate situation out there because it did show the results. But at the same time, you have a more 861 and also talk you about some next generation products. Can you give me the sense that you are at kind of efficacy level of which you are sort of getting so far, as far the 861 is concerned. It's the same range of 994? Is it better than 994, about the efficacy level and also the second-relation product as well.

Thank you, Yamaguchi-san, for your question. So the first question on ENTYVIO and the market performance. So first, I'd like to ask Julie to comment on the situation in the U.S. And then back to Ramona, has anything to add on the situation in Europe or other regions. And then on 994, the New England Journal posting. What implications does this have on 861? And more particularly, what are the efficacy levels that we've seen so far for 861? And what are our expectations for the next generation oral orexin agonist. I'd like to ask Andy to comment on that one.

This is Julie. So thank you for the question, Yamaguchi-san. In terms of ENTYVIO, I'm sorry, can you hear me?

Yes, sorry.

Okay, okay. Sorry about that. So in terms of ENTYVIO in the U.S., a few comments in regard to your questions, as you had multiple components in your question there. First, in terms of the impact of biosimilars to HUMIRA, it's a little bit too early to say the impact of those biosimilars. We are monitoring that closely. But so far, as anticipated, the biosimilars are really within class versus having an effect across different products within IBD. When we look at ENTYVIO performance, in particular, we're pleased with the very strong market share of ENTYVIO, and we continue to be the leader when it comes to IBD share and particularly in terms of bio-naïve share. For the market growth, as you mentioned there, market growth is still in the single digits. So it hasn't returned to double-digit growth as we've seen in the past. So those are the different parameters of the impact on ENTYVIO in the U.S. Ramona, do you want to add anything for Europe?

Thank you, Julie. Yes, I can comment a little bit outside the U.S. So in general, the market is growing double digits and actually volume is also growing double digits OUS. Really, the impact OUS is due to rebates and price cuts in Europe specifically. The underlying fundamentals, though, are looking good. So share is increasing, the market is growing. We do continue to lead in new starts globally both in U.S. and outside the U.S. As you know, we've got the subcu expecting to launch in the U.S. later this year, and we're continuing our evidence generation, Phase IV trials, looking at ENTYVIO in different lines of therapy. So we feel the fundamentals are looking good and continue to keep an eye on ENTYVIO as we go through the year.

Yes. Thank you, Chris. Yamaguchi-san, thank you very much. So we're just so excited to have now the 994 data out there in the New England Journal publication, both us and the principal investigators with whom we've been working for many years. And it's terrific that you now have a chance to see these data and understand why we're so enthusiastic about this mechanism. The question with respect to 861, 861 has every possibility to be as strong as 994 in terms of its efficacy profile. We don't have enough data now to know whether it will be equivalent to 994 across the multiple different parameters. And as you saw with 994, we're essentially able to take a type 1 narcolepsy patient, make them look like a healthy individual. The issue with 861 is going to be dose. So we're very thoughtful in terms of what our dose selection will be. And as we've said, because we want to be careful around the potential for liver toxicity, we'll cap our daily dose at somewhere around 10 milligrams. And so the question that we'll be asking with the Phase IIb study is, with a dose cap, what does that efficacy profile look like? And those are data that we'll have in-house at some point over the course of this year and we'll share next year and will be the basis of a go, no-go decision to Phase III. With respect to our backup programs, our first next-generation molecule will be coming into the clinic later this year, and they're really 2 intents behind the backup program. The first, if 861 doesn't have, what I would say, is a maximally efficacious profile in type 1 narcolepsy, then there's the potential for a next-in-class best-in-class. If 861 is the ultimate molecule for type 1 narcolepsy with maximal benefits, then our intent would be to develop these molecules in -- across a range of other indications. And then just -- I'll just add that we've only presented in this New England Journal paper, a subset of the overall data that we have from our oral orexin. And there's data that point us in many different directions for this particular pathway. And so that's one of the reasons we've been so really proactive in bringing a suite of molecules forward.

Thank you very much. Moving to the next question. We'd like to call on Seiji Wakao from JPMorgan.

[Interpreted] Yes. This is Wakao, JPMorgan. I have 2 questions. In this first quarter, the gross margin is lower now. Why is this? Is this according to plan? And PDT margin, I was expecting to see some improvement there. But what is your view on this? And I just want to understand whether the margin is improving for our PDT business. And continuing on what Yamaguchi-san asked, 994 and 861. I read the New England Journal. And the factors for liver toxicity for 994 was reactive metabolites, impact of reactive metabolites. What about 861? Is it a different type of a metabolite? Or are you going to do dosing correctly so that the metabolites is lower or smaller? Can you please explain again why you expect lower liver toxicity with 861.

Thank you for the question. So the first question was on reasons for the lower gross margin in Q1 versus prior year. Also related to that, the margins in the PDT business, how are they improving? So I'd like to ask Costa to take that question. And then the next question was on 994 and 861 and the reactive metabolites being the cause of liver injury for TAK-994. What's our thinking on that around the 861 program. I'd like to ask Andy to comment on that.

Thank you very much, Wakao-san, for your question. Regarding the core gross profit margin, as you rightfully highlighted, there is a softening versus Q1 of last year. And the main drivers for that are 3. The first one being the impact of loss of exclusivity products such as VELCADE, loss of exclusivity happened in May of 2022. So we're seeing the bulk of the impact of Q1 this year versus last year. So that's VELCADE loss of exclusivity headwinds as well as AZILVA which we experienced loss of exclusivity in Japan in June, and furthermore, DEXILANT in the U.S. loss of exclusivity in Q1. So those 3 products alone have very high margins. So having that loss of exclusivity had an impact on the overall product mix there. The second one is the European [ pullbacks ] that we experienced in Q1 versus last year. There was -- the impact of [ pullbacks ] in Europe, was not impactful in Q1 of last year versus this year. So that's another key contributor to the erosion of the gross profit. And then the third component is really the strengthening of the euro versus the yen, given that we have more of our manufacturing plants and a lot of the OpEx is in euros for cost of goods. We are experiencing some of those headwinds there. Having -- to your second part of the question on PDT, we are seeing in Q1 an improvement overall in PDT business, not only on the top line but also on the gross profit margin as well, given that the reduction in donor fees -- from last year, we did start to see a reduction in donor fees of anywhere between 10% to 15%. That's helping the improvement in the gross profit overall start to filter through the P&L this fiscal year, but not enough to offset the other components that I mentioned, mainly being the loss of exclusivity and the [ pullbacks. ] But overall, very pleased with the PDT performance. You saw in that, it's a key driver for growth in launch, growing at 24% at a constant exchange rate. And we're seeing really positive momentum on the gross profit and core operating profit lines.

Wakao-san, it's Christophe here. I will add that we are pleased with the start. You asked whether it was -- how do we see this first quarter. For us, it's a good start of the year. It's a line or above our expectations. So let's see how things evolve for the remaining of the year, but a good start for sure.

Wakao-san, it's Andy. With respect to your question on the similarities and differences of 861 and 994. The 861 and 994 are distinct molecules. They have overlapping metabolic pathways. And so it's hard for us to know exactly whether 861 at a high enough dose would contain -- would have the same liver toxicity liabilities as 994. And so that's one of the reasons why we're proceeding with caution and limiting our dose to an empirical level where below which, across the industry, we just don't see liver toxicity. And as I think we all know, toxicity is always a function of dose, and this is particularly true for liver toxicity. Just to put this in context, the liver toxicity for 994 was seen at the 90-milligram BID dose. So it's a 180 milligrams per day of exposure. At the 30-milligram BID dose, 60 milligrams per day of exposure, we didn't see the liver toxicity. And if we were to make simplistic assumptions that there's a 1:1 equivalence, which I don't think is fair, we're targeting less than 10-milligram per day dose for 861. So we're looking at a 6- to 18-fold margin to where that potential toxicity is with 994. With respect to the backup programs, our next-generation programs, we've developed a very distinct pharmacophore or very distinct chemistry. So the series looks quite differently. They're entirely novel metabolic pathways [ actually and pathways for illumination. ] So the issue is -- [indiscernible] out fully any potential issues, I would say, with the next-generation programs. And that's why -- why we spend so much time trying to rework some of the novelty in the space.

Thank you, thank you for your question. I'd like to take the next question from Hashiguchi-san from Daiwa.

[Interpreted] My question is on orexin agonist. Other than narcolepsy type 1, are there sleep disorders? What about the potential of orexin franchise indications other than narcolepsy type 1? Looking at New England Journal paper, regarding the dose demonstrating efficacy, it is low dose for narcolepsy type 1. But in other indications, sleep disorders may require a higher dose, that's discussed. And regarding symptoms, other than narcolepsy type 1 patients, there may be safety concern. That view was also described. And what is Takeda's view on this? And going forward, narcolepsy type 1 and others, what is your strategy going forward to develop for those different indications?

Okay. So Andy, you got that? If you would like to provide an answer on that one, please?

Sure, Chris. Thank you, Hashiguchi-san. So we're actively developing TAK-861 in both narcolepsy type 1 and narcolepsy type 2, We'll be looking at the data from those studies later this year and making a decision as to whether we move forward in type 1 narcolepsy, type 1 plus type 2 plus additional indications or whether we limit our future development in type 1 narcolepsy. It's a very interested in a range of disorders, and the data that emerged from the Phase IIb study on 861 will inform on how broadly we intend to bring that molecule. And again, we're bringing additional molecules. We have TAK-925 for postoperative indications, and then we have our next-generation molecules, which we'll intend to develop more broadly as well.

Thank you very much for the question. So next question, we'd like to invite Mike Nedelcovych from Cowen.

So my first question is from -- is on TAK-994. I was curious, the urinary urgency and urinary frequency AE was relatively prevalent. Are you seeing something similar with the next-generation agents? And is the dose reduction that's intended to address the active metabolite, is that also addressing to some extent the urinary urgency? That's my first question. And then my second question is on ENTYVIO. Do you anticipate a return to double-digit growth in the U.S.? And if so, do you have a general time frame over which you expect that to happen? And to what extent might this subcutaneous formulation contribute to that growth, if you expect it?

Thank you, Mike. So the first question on 994, the urinary urgency and whether we're seeing that with 861. I'd like to ask Andy to answer. And then the question on ENTYVIO potential return to double-digit growth, I'd like to ask Julie to comment on that.

Mike, the urinary urgency appears to be on-target tolerability issue with the orexin 2 receptor agonist, not related, we think, to the -- any of the metabolites. Even though it's prevalent in a large percentage of patients, it seems to be fairly mild. And one of the indicators that makes us feel quite confident that this is going to be something that won't be a problem for these patients is that we see almost no dropouts in our studies, both for 994 and for the ongoing 861 study. And we see almost 100% conversion from the main trial to our open-label extensions.

Mike, and in terms of ENTYVIO growth, I would say there are a few factors that we're looking at to have double-digit growth for ENTYVIO. First, as you heard Ramona say, we are anticipating approval and launch of ENTYVIO subcu in the U.S., and we do expect that to bring a lift to our growth. And then there are 2 other factors that we are working on. One is in terms of further evidence generation to support ENTYVIO. We have 3 planned studies in the U.S., 1 of which has already begun initiation in terms of work with our HCPs and clinical sites. And the second is in terms of leveraging data, digital and technology to further enhance our marketing capabilities to have more targeted and precise segments and marketing for ENTYVIO. So those are the 3 aspects that we are looking at to help drive ENTYVIO to double-digit growth this year.

Okay. Thank you, Mike. So the next question, I would like to call upon Muraoka-san from Morgan Stanley.

[Interpreted] This is Muraoka, Morgan Stanley. Can you hear me okay -- can you hear me, this is Muraoka speaking?

[Interpreted] Yes, we can.

[Interpreted] Maybe I think it's too early to talk about the next fiscal year. But so far in this fiscal year, I think you are on track. And there are maybe some upside in your performance. That's my understanding. And the next fiscal year, no longer VYVANSE and ENTYVIO may take a little longer time to recover, then in the next fiscal year core operating profit, do you think it achieves positive growth? Or it may be flat or negative growth in 2 years running. Do we have to consider that possibility, that risk?

Okay. [indiscernible] 2024, depending on VYVANSE and ENTYVIO, how they play out? Is the potential that 2024 could be a year of decline. So I'd like to ask Christophe perhaps to comment on this question.

Thank you, Muraoka-san, well, it's way too early to give a guidance for the next fiscal year. I think the one key factor here will be the VYVANSE generic impact. We -- today, we plan for generic entry in August. You can imagine that if it will be delayed, for example, or if the number of generics would be lower or higher than what we have in our plan that [indiscernible] will have an impact on the erosion curve. At the present time, our assumption is that we will rebounce in '24, '25 because we think that there will be much more limited impact of generic in '24, '25. But it's really important that we look at what happened this fiscal year in order to predict better how we rebounced. And if we rebounce as planned, it will be a rebounce on both the core operating profit on the revenue. But let's see, during the fiscal year '23 how things are evolving with both VYVANSE and AZILVA actually in order to predict better how we can see '24, '25 rebounce. Thank you.

Great. Thank you very much. Next question, I'd like to call upon Steve Barker of Jefferies.

Steve Barker from Jefferies. Two questions. One, about 861, I'd like to ask Andy about the choice of the 10-milligram dose. I understand the logic regarding wanting to reduce the risk of side effects. But given if you could explain what you're seeing in terms of the potency, and therefore, what you might theoretically expect to see in terms of the efficacy, some comments around that would be much appreciated. And then my second question is perhaps for Christophe, maybe Costa, Christophe, you mentioned in your comments that you would expect to see the core OPM get back up to low 30s -- low to mid-30s. And you mentioned that application of AI might be able to help efficiency. I'd actually be very interested to see -- to hear what -- how you think AI can be applied to the pharmaceutical business.

Okay. Steve. So I guess first question, Andy. And then maybe, Christophe, to start on that second question.

Steve, thank you very much. So firstly, 861 is a significantly more potent molecule when we look at the in vitro pharmacology relative to 994. It's also a molecule that has a more extended exposure and a longer half-life. So it's very different properties in TAK-994. So it's been important for us to look at the data that come out of our Phase IIb study to understand whether with our dose limit -- our dose cap, we can achieve the same level of efficacy as TAK-994. But intrinsically, the molecule has the potential to do that even at lower doses. And I'll add that we plan to begin sharing data from the 861 program in type 1 narcolepsy patients later this year. So some of the healthy volunteers see deprived data, some of the PK/PD modeling that we've used, those data will start to be out there in the coming months.

Thank you, Steve, for the question. We see a very high potential for the utilization of AI in our business. But I will emphasize that is data, technology and AI. Without the data, you cannot train the AI. And without the technology, like image recognition, you don't have -- you don't generate data in many parts of our business. So we have been focusing on having data lake and data domain well structure in order to train the AI algorithm. And we are seeing application across our value chain. For example, in manufacturing, we are using image recognition on our manufacturing line in order to improve the efficiency of the line, for example. We are using AI as well to do some visual recognition that we have done manually in the past. So manufacturing side, we see a lot of productivity implication. On the research side, we are using AI for molecule design or for toxicity modernization, for example. We will use also the AI to accelerate clinical trials, test protocol, have higher patient activation. On the commercial side, we are looking at optimizing our interaction with doctors in a digital way, and we are using a algorithm as we speak already. On the data -- on the PDT side, for example, we are using some algorithm to have a better relationship with our donors. And so it's really across the board. And I didn't talk about back office, but we are also using this type of technology in our back office. In fact, we think that all our employees eventually will have some application of AI for their jobs. So this is really a very high priority for us. Thank you.

Thank you, Steve. And with that question, it brings us to the end of our time today. So thank you, everybody, for joining us on this conference call, and we look forward to talking with you again at a later date. Thank you, and good night. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]