Thank you very much for your participation in the conference call for the financial results for fiscal year 2023 of Takeda Pharmaceutical Company Limited. My name is O'Reilly, Head of Investor Relations. First, I would like to explain about language settings. There are language section bottom -- at the bottom of the Zoom window. If you wish to listen in Japanese, please select Japanese. If you wish to listen in English, please select English, or if you wish to listen to the original audio, please select off. Before starting, I would like to remind everyone that we'll 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 Page 2 of the presentation regarding the 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 to the presentation. I would like to move on to the presentation. Christophe Weber, President and CEO; Andy Plump, President of R&D; and Milano Furuta, Chief Financial Officer, will make a presentation. After that, we will have a question-and-answer session. Now we'd like to begin.

Thank you, Chris. Thank you all for joining our fiscal year 2023 earning call. It's really a pleasure to be with you all today. In fiscal year 2023, we continued to demonstrate our ability to discover and deliver life-transforming treatments. This vision, along with our values is central to our strategy and daily execution. I will now review our full year performance and our priorities ahead. First, fiscal year 2023. To summarize fiscal year '23, it was a well managed but tough year. Despite significant generic headwinds, our top line performance exceeded management guidance, with core revenue growth of plus 1.5% at constant exchange rate. This growth was driven primarily by the performance of our Growth & Launch Products, which increased 12.8% year-over-year and now represent 43% of our total revenues. Our core operating profit declined 13.3%, which was in line with management guidance and reflect the loss of exclusivity for high-margin products, including VYVANSE and our continued investment in R&D and data, digital and technology. Core EPS declined 15.7%, which was above our projected low 20s percentage decline. We made significant progress in our pipeline in fiscal year '23 with 3 new therapies approval in the U.S., FRUZAQLA for metastatic colorectal cancer, ADZYNMA for congenital thrombocytopenic purpura and EOHILIA for eosinophilic esophagitis. We also expanded our existing portfolio with several important life cycle management approvals. Takeda received U.S. FDA approval for ENTYVIO PEN in ulcerative colitis in September and in Crohn's last month. We also received approval in the U.S. for our PDT therapies, HYQVIA and GAMMAGARD LIQUID in chronic inflammatory demyelinating polyneuropathy, or CIDP. And our dengue vaccine, QDENGA, is now approved in more than 20 countries, including where the disease is endemic. In addition, we progressed 2 important potential clinical therapies, TAK-279 and TAK-861 into advanced stage…

Thank you very much, Christophe, and hello to everyone on today's call. If we can go to the next slide, please. As Christophe mentioned, we've had a very successful year with significant maturation of our pipeline while delivering 3 new molecular entity approvals in the U.S., FRUZAQLA, ADZYNMA and EOHILIA, in addition to important indication expansions of key products. The ENTYVIO PEN, a convenient at-home administration option for patients, was approved in the U.S. for maintenance therapy in both ulcerative colitis and Crohn's disease, as Christophe mentioned. QDENGA, our dengue vaccine, continues a steady cascade of approvals across the globe. HYQVIA, our facilitated subcutaneous immunoglobulin treatment, received a key approval as maintenance therapy for CIDP in both the U.S. and Europe. HYQVIA offers the potential for once-monthly infusion, which can positively impact patient lives and elevate the standard of care. In addition, as you heard from Christophe, a series of positive Phase IIb readouts and partnering activity continued to enhance the strong momentum across our new molecular entity pipeline fueling our growing late-stage portfolio. A few examples. Our potential best-in-class TYK2 inhibitor, zasocitinib's Phase III LATITUDE psoriasis trials are enrolling beyond our forecasts. They're doing this by leveraging novel digital approaches. Zasocitinib's positive Phase IIb data in psoriatic arthritis was presented at the American College of Rheumatology and the Phase III LATITUDE psoriatic arthritis studies are expected to begin in the second half of this fiscal year. Our lead oral orexin agonist, TAK-861, read out positive Phase IIb data in narcolepsy type 1 and just received FDA Breakthrough Therapy designation. These very exciting data will be presented at the Sleep conference in June, and we will hold an analyst call after the presentation to review the data for those who cannot attend live. TAK-861 will begin Phase III development in…

Thank you, Andy. Hello, everyone. It's my pleasure to present FY '23 results and financial outlook for FY '24 and onwards. FY '23 revenue was over JPY 4.2 trillion, an increase of 5.9% on an actual FX basis or 1.5% at constant exchange rates, or CER. This result exceeded our management guidance of low single-digit decline at CER, mainly due to [ Mauda ] generic penetration of VYVANSE on top of continued momentum of our Growth & Launch Products. Core operating profit, core OP, was JPY 1,054.9 billion, a year-on-year decline of 13.3% at CER, in line with management guidance for low 10 percentage decline. This decline mainly reflects the LOE of high gross margin products, transactional FX impacting COGS and increased investment in R&D and data, digital technology, let me call it, DD&T. Reported operating profit was JPY 214.1 billion, a decline of 56.4%, including higher impairment losses based on study readouts of ALOFISEL and EXKIVITY as well as higher restructuring and litigation-related expenses. Core EPS was JPY 484, a 15.7% decline at CER. It landed better than our management guidance, low 20s% decline, due to more favorable core tax rate. Reported EPS was JPY 92, a 54.9% decline with lower financial income than prior year, offset by a reduction in tax expense. Operating cash flow and free cash flow was JPY 716.3 billion and JPY 283.4 billion, respectively, which I will explain later. Let's look at the year-on-year revenue dynamics in Slide 21. Our Growth & Launch Products grew by 12.8% at CER, representing now 43% of total revenue in FY '23, which was almost entirely offset by the impact of LOEs. Growth of other products more than compensated for lower COVID-19 vaccine sales and total revenue landed with 1.5% growth at CER. The depreciation of the yen…

Thank you, Andy, and thank you Milano. As I said at the beginning, I would describe fiscal year '23 as a well-managed tough year. In a very challenging environment, we met or exceeded our management guidance and made significant progress in our pipeline and marketed therapies. Looking ahead, we believe that we have 1 final year in 2024 of significant headwinds from VYVANSE loss of exclusivity before a long period with minimal loss of exclusivity exposure, a period during which we will fully benefit from the growth generated by our Growth & Launch Products. In our late-stage pipeline in fiscal year '24, we expect to have up to 6 promising programs with high revenue potential, and we are committed to the rigorous prioritization needed to maximize their potential for success. Our return to revenue growth combined with a significant efficiency program we introduced today, give us a clear path to delivering 100 to 250 basis points core operating profit margin improvement each year from fiscal year '25 towards our low to mid-30s percentage target. Finally, we remain committed to delivering an attractive return to our shareholders and feel confident in proposing an increase to our annual dividend again this year. We look forward to the opportunities that lie ahead. Thank you for your continued support and confidence in Takeda. I will now hand it back to Chris. Thank you.

Now we'd like to entertain questions from you. In addition to Christophe, Andy and Furuta, we have Ramona Sequeira, President of Global Portfolio division; Julie Kim, President of the U.S. business unit; Giles Platford, President, PDT Business Unit; Teresa Bitetti, President, Global Oncology Business Unit joining in the Q&A. [Operator Instructions] So we'd like to move on to the first question. Jefferies, Steve Barker.

Yes, it's Steve Barker. So my first question is about your restructuring. You plan to book a charge of JPY 140 billion this year. I'd be interested if you could share any details about what this is going to entail and the scope of any planned redundancies, which divisions that's going to focus on? And then my second question regarding the vaccine business. Christophe's comments, I think it seems to indicate a more enthusiastic commitment to the vaccines business based upon the success of QDENGA. But you only have 1 global product. Should we understand that your new plan could involve adding vaccines to your portfolio potentially through acquisitions.

Thank you, Steve. So the first question on restructuring and more details on the program. And then the second question on our strategy in the vaccines business. I'd like to ask Christophe to answer both of those questions.

Thank you, Steve. So the first question, the efficiency programs does include some redundancy and in many different areas of the company. It's -- it will impact differently different departments, but we are looking at a more agile organization, streamlining organization, gaining more efficiency data with data technology and AI. The pipeline prioritization also will create some reorganization. So there is an element of redundancy in this provision. It's not 100% that, but it's a significant part. Regarding the vaccines development, we are very excited about QDENGA for sure. I mean, it's -- first, it's a great vaccine, it's very efficacious. And, unfortunately, dengue prevalence is increasing very significantly in endemic countries. On the other hand, for future vaccines development, we are looking for a strategic partner. We don't want to do it alone by ourself. We are missing many strategic components in vaccines. So we want to -- ideally, we would like to find a vaccine strategic partner to potentially develop more other vaccines, if you like, after QDENGA.

How would that sort of strategic partnership work? What role would Takeda play in such a partnership?

I will not give you detail at this stage because I cannot disclose the type of discussion that we are having. So there are many different types of potential model of strategic partnership. But basically, we think that if we could find a good partner, it will strengthen our capability in vaccines development. It will also reduce our financial exposure. Developing new vaccines is very expensive, very, very long, which is fine, but we are also missing some core capabilities. So there are many different models. If we -- of course, at one stage, if we are able to do a strategic partnership, we will share with you the details.

[Interpreted] Next question from Yamaguchi-san, Citi, please.

This is Yamaguchi from Citi. The two questions. The first one is regarding PDT business. The PDT business is growing faster than the industry, and you seem to have a good condition of course, as well and operating margin is now improving. Can you give us a guidance what kind of gross margin you're looking for, for this fiscal year compared to last fiscal year? That's the first question. Second question is regarding narcolepsy project. On the abstract of sleep at the TAK-861, and congratulations on the PDT, but the placebo adjusted time is around 26 minutes. I think it's between 3 to 5 milligrams, if I remember correctly, which is great. But it's a little bit weaker than 994 and also, this is only for NT1. So can you give us any impressions of why it is a little bit less efficacious compared to 994 because of dosage things? And also, why did you do only for the NT1 and giving up NT2 and IH for that?

Okay. Thank you, Yamaguchi-san. So the first question on our PDT business, I'd like to ask Giles to comment. And then the second question, on TAK-861 for Andy to answer that one. Thank you.

Thank you, Chris, and Yamaguchi-san for the question. We do expect the PDT business to continue growing high single digits in fiscal '24, with the immunoglobulin portfolio growing 5% to 15% and single-digit growth from our albumin portfolio. We don't give guidance around gross margin or COP by division. But what I can show you is that we continue to see positive momentum in margin expansion for the PDT business, driven by better value recognition, better portfolio mix, particularly uptake of our innovative subcutaneous IG portfolio, supported also by the recent approval for IQVIA in the U.S. and Europe for treatment of CID patients -- CIDP patients, but also supported by continued investment in DD&T transformation across the value chain, which is helping to drive efficiencies in productivity. Thank you.

Yamaguchi-san, this is Andy. Firstly, with respect to 861 and type 1 narcolepsy, the good news is that in 3 weeks, you'll have an opportunity to see the full-day set as it's presented at Sleep. And as I mentioned, we'll host there and [ IR ] can go deeper into the -- into your questions and share more of the data. Just -- so at this point, just a few brief comments. Just a general comment, which is I think it will be hard to get a profile that will be more -- that will be better than TAK-861 in type 1 narcolepsy. It will be hard to create a profile that's going to be better. And I wouldn't look at a small number, numeric differences in a highly artificial endpoint like MWT as relevant. What will be very important for you to see is the efficacy across the multiple different aspects of type 1 narcolepsy, excessive daytime sleepiness, cataplexy, nighttime sleep architecture and then measures of patient functional quality of life. We've looked extensively across all of these. And I can tell you that the profile for 861 is quite transformative. And for many of these patients, we're functionally curing their type 1 narcolepsy. In addition, there's a therapeutic index that's important to thread the needle. So dose becomes quite important in managing efficacy with therapeutic index. And we think that we have threaded that needle with TAK-861 and you'll see the data in a few weeks. With respect to type 2 narcolepsy and idiopathic hypersomnia, there's clearly a dose response element, and we made the calculated decision that we wanted to focus type 1 narcolepsy with 861 and part of that decision was the data that we had seen in our Phase IIb studies, part of that decision was, as you know, our intent to really go forward with the lowest efficacious dose possible for 861 given the history with TAK-994. And then perhaps most importantly was the momentum that we were generating with TAK-360, which is now in the clinic. Our intent for TAK-360 is to move forward very rapidly in type 2 narcolepsy and other way sleep cycle disorders.

Thank you, Yamaguchi-san. So for the next question, I'd like to call on Cowen, Mike Nedelcovych.

I have two. The first is on ENTYVIO. You note that newly launched ENTYVIO competitors appear to be gaining share from other drug classes, but AbbVie's IL-23 is approved in Crohn's while only filed for UC, and Lilly's IL-23 was approved in UC only 6 months ago with Crohn's approval pending. So I'm curious how confident are you that this dynamic will persist in ENTYVIO's favor? And then my second question is on TAK-007. You kindly outlined the differentiated features of TAK-007 relative to competitors pursuing cell therapy for autoimmune disease, but why is this approach superior to, for example, CD19 or CD20 directed T cell engaging antibodies? And where might TAK-O07 have limitations relative to other modalities?

Thank you, Mike. So the first question on ENTYVIO market share performance, particularly in late lines of therapy. I'd like to ask Julie to comment on that. And then on TAK-007 in immune disorders, Andy can comment on that.

Thanks, Chris, and thanks for the question, Mike. When it comes to ENTYVIO's performance in the U.S., I think being 10 years on the market and able to grow demand faster than the market and maintain our market share leader position in first line, both in IBD overall and bio-naïve starts demonstrates the strong track record that ENTYVIO has being a gut selective option for HCPs to use with their patients in both UC and CD. So we do believe that in first line, we'll be able to hold our market share position given the track record that I just mentioned. And where we see the new entrants gaining share is in second line and beyond. So we expect the -- as new products continue to gain the different indications, whether it's CD or UC, that that's where we will see them take hold when they launch.

Mike, it's Andy for -- with respect to TAK-007, we, of course, don't want to get out ahead of ourselves here. This is just an extraordinarily exciting and competitive landscape right now and we're really learning as we're moving forward. The profile for TAK-007 fits very well with autoimmune diseases. It's an off-the-shelf agent. Manufacturing is quite simple. We have a cryopreserved formulation that we can ship anywhere in the world. The cost of goods are a fraction of what it costs to make an autologous cell therapy. Our experience in oncology is that the safety profile is better than what we've seen with autologous cell therapies, and it's quite potent. So it lends itself very nicely, as you can imagine, to patients with autoimmune diseases relative to patients with cancer. Of course, there's a lot for us to understand. We feel quite confident based on the activity of TAK-007 that we'll see efficacy similar to what's been seen with the other cell therapy agents in these diseases, but that's something that we still need to sort through. We also need to sort through what conditioning regimens will look like, what dose will look like. So there's still a lot to learn. Your question though around how it compares to non-cell therapies, I think the answer to the question is we just don't have proof of principle for any other type of agent having the kind of truly remarkable, transformative efficacy perhaps curing these diseases. And actually, the experience to date with depleting antibodies like CD19 naked antibodies or CD20 naked antibodies suggests that you can significantly eradicate circulating B-cell populations, see modest to significant benefits over a short term, but then rebound of disease. And for reasons that I don't think the field fully understands, the cell therapies have been much more active and not driving significant initial responses, but sustained responses over years. So I think the jury's still out as to whether other agents are going to be as effective, let's say, as the cell therapies. And then lastly, you're asking about the liabilities of TAK-007. It looks quite good. I guess the 1 kind of challenged a bit right now is that you still require conditioning. We don't know if you can just purely give a cell therapy without actually conditioning the bone marrow to allow for reconstitution with the cell therapy, but it's certainly something, an area that we'll be exploring, which will be less severe conditioning regimens.

Okay. Thank you. So moving on to the next question, I'd like to call on Muraoka-san from Morgan Stanley.

[Interpreted] This is Muraoka, Morgan Stanley. My first question is about the core OP margin recovery. You mentioned 100 to 250 basis points improvement a year is expected. And if it is actually following the plan, then I think probably in 2030, FY, the target will be attained from the current 29.7%. And then I think that it may be reaching to sort of high-level ones, but it may be declining after that. Is that the right understanding? And also this improvement will come from the improvement of the gross margin. That's my first question. Second question is about PDT. There are other competitors' compounds, and there seems to be in trouble now. And Takeda, in terms of the collection centers is that -- be any chances that you will have more business opportunities, for instance, to more relatively easily get a collection center?

So I'd like to ask the second question on PDT to be answered by Giles around whether there are any opportunities to acquire more centers. And then the first question on margin, I'd like to ask Milano to comment, and then if Christophe has anything to add. Thank you.

[Interpreted] Muraoka-san, thank you very much for your question. As you said, the starting point is about 23%. And then annually, 100% -- 100 to 250 basis point improvement is expected. And then in order to reach 30% it takes time and that time period that you mentioned is more or less correct. And that may be overlapping with the ENTYVIO timing. However, there will be new pipeline coming out and making contributions to the profit. Therefore, I think the profit profile will be different. So after ENTYVIO LOE, what will be our profit rate? It is difficult at this stage to estimate, but we also have to expect the contribution from new products as well. Thank you.

Giles?

Muraoka-san, thank you very much for the question on PDT. We are always looking at both organic and inorganic opportunities to continue to expand our capacity, both in our collections network that you referred to, as well across our manufacturing network. We have committed to expand our capacity by 50% over the next 5 years, up to fiscal '28. We have opened over 100 new collection centers over the past 4 years. So doubling the size of our collections network. We're very excited about the ramp-up that we're now seeing over the coming years that will help to gain in efficiency and productivity, particularly with data and digital. We've made reference in the slide deck to the commencement of the rollout of our personalized nomogram program, which will be effective in 35 centers across the U.S. by the end of fiscal '24, and we will continue rollout across our entire network in fiscal '25, along with other data, digital and technology investments, which will support further capacity expansion. Thank you.

Thank you very much. Okay. The next question, I'd like to call upon Wakao-san from JPMorgan.

[Interpreted] Wakao-san from JPMorgan. Two questions. One, in TPO FY '24, JPY 964 billion. Can you elaborate on that? FY '23 CER base was 6.6% growth but you now expect 16% for FY '24. That's a big growth. Do you see some trend in the [indiscernible] to say that you can have that improvement? And then IgAN POC data, can you explain it and add some color. As you mentioned, development is rather competitive. TAK-079 POC compared to other competitors' products, do you have competitive data available already? Can you explain that, please?

Thank you, Wakao-san. So the first question on ENTYVIO performance and outlook for 2024, I'd like to ask Julie to answer this. And then the second question on mezagitamab and the data that we have in IgAN, anything that Andy can comment on its competitiveness at this stage.

So thank you for the question, Wakao-san. In terms of the ENTYVIO outlook of 16% growth year-over-year, we appreciate that this is an ambitious target, but we do believe that it is achievable. A number of things contribute to the thinking behind this. First, when you look at the growth of ENTYVIO PEN, the subcutaneous formulation for ENTYVIO, we continue to see good signs from the launch in the U.S. You heard Christophe mention some of those statistics in terms of access to new HCPs, new patients as well as the uptake that we've seen in general in UC, and we're very excited about the CD approval that we received last month. In addition, when you look at what's happening from a revenue perspective, we did experience significant clawbacks and rebates in Europe last year in FY '23 that we don't anticipate will be as strong in FY '24. In addition, when you look at the advanced therapy market and the number of patients that still remain on conventional therapy, that there is still an opportunity for us to gain additional patients, particularly with our first-line position in the U.S. So all of these combined give us reason to believe that we can achieve the 16% growth in FY '24.

And Wakao-san, on mezagitamab or TAK-079, there's something quite unique about the depleting activity of this agent that goes far beyond the reductions that we're seeing in immunoglobulin and the best demonstration of that has been in ITP, where, as I mentioned, we see -- we do see reductions in immunoglobulins and -- but those are actually less than what's seen with the anti-FcRns and yet, in ITP, our data set, which we'll present this year and you'll have a chance to see that, is quite different than what's been seen with FcRns, both in terms of the magnitude of response in refractory patients as well as the rapidity of response. So there's no way to explain the rapid rebound in patients' platelet counts based solely on reductions of circulating pathological immunoglobulins. And I'm not sure that we fully understand what's driving that rapid and profound benefit, something that we're investigating. And in refractory ITP, third line and some second-line patients, there really isn't a competitive agent. I think this is a real chance for us to offer significant benefits in a market that's much less competitive. The profile of mezagitamab is further supported by what we've seen in IgAN. And there's not much I can share at this point more than what we've said based on the Ib data that we've shown. I can say that it is a very competitive landscape. And the data that we've seen with meza is on par or better than essentially anything that's been presented. We're all still looking at relatively early data sets that are focused predominantly on a proxy measure of benefit in IgAN, which is proteinuria. I don't think we fully understand whether proteinuria will translate to preservation of renal function, which is going to be the clinical endpoint that will be most relevant in this patient population, and there are many different mechanisms of action. And we're the only CD38 depleting antibody that's progressing right now in IgAN. So I think that we have a chance to be quite competitive in this space, despite the large number of different agents that are being tested. It's also a relatively large market with very unmet medical need. So there's the potential for multiple different agents. Thank you.

Thank you. Moving to the next question, I'd like to call upon Tony Ren from Macquarie.

Can you guys hear me?

Hi, Tony. Yes, we can hear you.

Okay. Perfect. Yes. So a couple of questions. So first one on your pipeline TAK-279, zasocitinib. It looks like the head-to-head psoriasis trial against so TYK2 is now delayed by about 2 to 4 quarters. I wanted to get some understanding on what's the thinking behind that. In addition, this is a question on ENTYVIO, the effort to extend its loss of exclusivity, we've been seeing -- in the U.S., we've seen that they've been pretty -- getting increasingly tough on drug pricing and patent [ ever grainy ]. We see FTC taking some pretty tough actions. So how confident are you guys about extending the ENTYVIO loss of exclusivity into the 2030s? So that's the two for me.

Okay. Thank you, Tony. So the question on zasocitinib, I'd like to ask Andy to comment on that, and then perhaps Ramona could add some color on the market opportunity for this program as well. And then the next question on ENTYVIO and our loss of exclusivity assumptions, particularly in the U.S., I'd like to ask Julie to comment on that. So first, Andy, please?

Thanks, Chris. Thanks, Tony. So we're not -- the head-to-head study, the timing of the head-to-head study is not delayed per se. Where -- the head-to-head study will not be necessary for filing. The filing in psoriasis would be based on the 2 LATITUDE Phase III studies. And what we're doing is we're still working the design of the head-to-head study to make it most relevant to physicians and patients to understand the differences between zaso [ and ducra ]. And we're just timing that study to have the data at the appropriate time point to support the launch of zaso. And then I'll hand it over to Ramona or Julie to comment on the competitiveness.

Yes, I can do -- I can make some quick comments, Tony, on 279 and the plans that we have. And first of all, let me say that, that head-to-head trial remains an important part of our evidence package. So it's not registration enabling. So we -- there's no compromising to our time lines. But at the same time, we know we have a very, very strong product. We know the profile of 279 is 1.3 million fold greater binding for TYK2 versus JAK. And so we know that we can dose for efficacy, achieving favorable side effects, while decreasing the risk of nonselected JAK inhibition. We saw from our Phase III trials that 1/3 of patients had clear skin in our Phase IIb. So we're pretty excited about moving ahead with our full package psoriasis, psoriatic arthritis, doing our work in UC and CD and the head-to-head versus [ ducra ] in psoriasis is a big part of that evidence package. So our time lines are not compromised. We're staging the trials to complete them quickly, and we're moving ahead with that. Thank you.

Tony, in terms of the question on the ENTYVIO LOE, our assumptions here have not changed in terms of when we expect that to occur. And part of this is driven by the patents that we have on ENTYVIO, but part of it is also driven by timing of the clinical trials needed by other companies in order to challenge ENTYVIO with the generic. And so given those combined data points, we believe that the LOE -- or the challenge from a generic would not occur until 2030 at the earliest and 2032 is what we've been communicating.

Thank you, Tony. Okay. Moving to the next question, I'd like to call upon Nomura Securities. I see a hand raised by Maeda-san or Matsubara-san.

[Interpreted] I am Matsubara, Nomura Securities. Can you hear me okay?

Yes. Thank you.

[Interpreted] The first question is about ENTYVIO. In your previous answer, we understand that ENTYVIO will grow. However, so far, during the COVID-19 pandemic or even after pandemic, the patients are not coming back. And what is the current situation? Second question is about VYVANSE. Generics supply shortage, I think is still going on. And looking at FDA list, in April, May or maybe up to August, some genetics may be shipped out, but still there's a shortage. So this generics impact, how much do you think that it is expected in this new year?

Thank you, Matsubara-san. So first question on ENTYVIO and whether patients are returning after coronavirus. And then the second question on VYVANSE generics and what our expectations are for generic supply in 2024. So I'd like to ask Julie to answer both of these questions.

Thank you, Matsubara-san for the questions. First, in terms of ENTYVIO, let me distinguish between ENTYVIO performance versus what the market performance has been. I think that is at the heart of your question. So as we've shared before, when you look at certain factors like diagnosis rates, we do see that diagnosis rates, whether it's for UC, but particularly for CD, are much lower than what they were pre-pandemic. So the market growth overall has been slower than pre-pandemic. We estimate that the market growth for this past fiscal year was roughly just over 4% in terms of demand growth. And so we do expect that the market will continue to grow, albeit at a slower rate than it has historically. In terms of ENTYVIO's position within that, as mentioned before, we are holding on to our first -- sorry, our position in first-line in IBD overall as market share leader as well as bio-naïve starts. In terms of your second question around VYVANSE generics supply. Let me start by saying we now have 10 generics that are on the market in the U.S. Initially, it started with 7, but now we have 10 generics on the market. The generics companies have experienced some supply challenges as noted on the FDA shortage website. But we do anticipate that going forward, the generics companies should be able to better supply the market. So from a VYVANSE -- branded VYVANSE perspective, we are not experiencing any supply challenges, and we are able to provide VYVANSE -- branded VYVANSE to meet the demand that still exists in this market.

Okay. Moving to the next question from UBS, Haruta-san.

This is Kasumi Haruta from UBS. Can you hear me?

Yes, we can hear you. Please go ahead.

Yes, I have two questions. First one is about the margin improvement program. I guess this program will start for March '26. How should we think about the improvement progress? Earlier timing after the start timing could be drastically changed or latter timing could be better margin improvement? How we should think about the improvement progress going forward? And second one is on TAK-861. If I'm correct, I think Andy-san mentioned those will be the most lowest dose for the Phase III. So is that correct? And I assume from the abstract from the Sleep, there was no dose dependency results from the MWT endpoint. And I would like to know the reason or background of this dose dependency result.

Thank you, Haruta-san. So the first question around the margin improvement, I'd like to ask Milano to comment on that. And then Andy, on 861 dosing. Milano?

Thank you, Haruta-san. So the -- let me clarify again, the -- so the baseline or starting point for the margin improvement will be FY '24. And then from there and '25 onwards, we are -- we intend to improve 100 to 250 basis points each year. So it's going to -- '25 OP margin will be better than '24 and then onwards. So you can count like that. It's not starting from '26 and onwards. From baseline from '24 and improving from FY '25. Is that clear?

Yes, it has a range for 100 to 25 drug 250 bps. So I wanted to more know about how skewed that margin improvement is progress or drastically changed from the beginning or latter timing will be more uptick for the improvement?

Thank you. So the -- we start program from this fiscal year, and we expect the sort of benefit of this program will gradually increase toward '25, '26. So the reason why we gave EBITDA the range from 100 basis points to 250 basis points is we expect at this moment, EBIT margin improvement will be bigger in FY '26 than FY '25.

And Haruta-san on 861, I didn't mean to suggest that there isn't dose responsiveness in our 861 data and -- but -- so the good news is that in 3 weeks, we'll have a chance to dive deep into all of the data. So I'm not going to really try to unpack that here today. But I will say that -- and I'm not going to comment on -- I can't comment on our Phase III dose at this point. We're still working through the design and having discussions with regulatory authorities. And it's also something that we'll look at as quite competitive. But I will say that our Phase IIb study was designed and we never use the word perfect, but almost perfectly to really help us understand how to move forward into Phase III with the dose that we think will thread the needle in terms of maximal efficacy in type 1 narcolepsy and the best safety and tolerability.

Okay. I think we have time for one final question. So I'd like to ask SMBC Nikko, Wada-san.

[Interpreted] Wada-san, SMBC Nikko Securities. Can you hear me?

Yes.

[Interpreted] Well, there are two questions I'd like to ask. As for research and development pipeline, you have been selective in prioritization. So impairment losses has been completed in fiscal 2023. Is that correct? And how would you plan to have R&D played out for the next 5 years? Are you going to expect this to be flat? That's my first question. And second question, 861 successor, 360 positioning. You're aiming for NT2, but 861 is for NT1. So there is a differentiation and you're aiming for NT2 for 360, but in terms of advantage of the agent, is there any evidence that you see that this will be effective in NT2? But NT2, orexin is not that much playing a role, so orexin agonist, is that really effective in addressing NT2? That's my question.

Costs related to R&D prioritization and our R&D expense outlook going forward, I'd like to ask Milano to answer that question. And then the second question on positioning of TAK-360, I'd like to ask Andy to comment what have we seen that suggests that it could work in NT2? And what is the hypothesis behind orexin agonists working in NT2 when these patients already have orexin circulating in their brains? So I'd like Milano first question; Andy, second question, please.

[Interpreted] Thank you very much for your question, Mr. Wada. For the first question, we have done the implemented program to prioritize the programs and impairment losses were booked and winding down costs were booked in FY '23. Almost all were booked in FY '23. And going forward, for the budget of R&D. in terms of our prospects, gradually, there will be an increasing trend in line with the increase in revenue. So we are mostly in line with the increase in revenue. That's how we are going to manage R&D investments. So in terms of percentage of revenue, or OP margin, it is going to be neutral.

[Interpreted] So does that mean that going forward, you are going to see the improvement in margin, OP margin? So that means that you are going to reduce COGS and SG&A?

[Interpreted] Yes, that's correct. Thank you.

Wada-san, this is Andy. We've -- over the past several years with multiple molecules, we've demonstrated that orexin agonist can be effective in NT1 as well as a range of sleep-wake cycle disorders that are characterized by normal orexin levels. So NT1 is orexin deficient and all of the other indications that we talked about, including type 2 narcolepsy and idiopathic hypersomnia have normal orexin levels. So there's a very different disease etiology and the pharmacology is quite different. We have the most experience with type 1 narcolepsy. And I'll add something I haven't mentioned, which is that we have now an open -- an ongoing open-label extension study with 861 in type 1 narcolepsy. And we've now seen data for most patients up to 6 months and now some patients up to a year and those data will be presented later in the year, but we continue to see sustained, durable, robust efficacy. There's still a lot for us to learn in type 2 narcolepsy in idiopathic hypersomnia. We've seen benefits in short-term therapy. The sustainability of those benefits over time is something that we'll have to demonstrate in clinical trials. And so we've made the decision for 861 to really focus on type 1 narcolepsy. 360 was developed purposefully and is differentiated from 861. And we believe, based on our understanding of its profile preclinically and our translational understanding of this mechanism, that it will be effective in type 2 narcolepsy and idiopathic hypersomnia, and that's what we're focused on is moving as fast as possible to get those data and to accelerate it to patients.

Thank you. With that, we've now reached the end of call. Thank you, everyone, for attending. And if you have any follow-up questions, please reach out to the Investor Relations team. Thank you very much, and good night, good day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]